PCL 1L Contracts
Part I
Review
Compensatory Damages Continued
Contracts for the Sale of Goods
Buyer's Damages
Seller does not deliver, or goods are nonconforming to contract (i.e. buyer rejects or revokes acceptance). Difference between contract price and one of market price OR cost of buying replacement goods ("cover"), plus any incidental or consequential damages. Expenses saved by seller's breach will be offset. In the case of anticipatory repudiation, damages are measured at time of breach.
Difference between contract and market price
Damages measured generally at the market price when buyer learns of breach at the place of tender, plus any incidental or consequential damages.
Difference between contract and cost of replacement goods "UCC Cover"
Standard buyer's measure for damages. Replacement goods contract must be reasonable, in good faith, and without unreasonable delay.
Buyer Accepts Nonconforming Goods
Must provide seller notice in a reasonable time after discovery of defects. Entitled to:
Warranty Damages the difference between the value of the goods contracted for and the value of the goods as delivered, plus any incidental or consequential damages.
Note on Consequential Damages under UCC
Barbri notes that sales to parties engaged in:
- resale
- manufacturing
puts the seller on notice of foreseeable damages.
Sellers Damages
Buyer refuses to accept goods or repudiates the contract. Difference between contract price and one of market price at the time and place of delivery OR the resale price, plus any incidental damages. If market price does not make seller whole, they may recover lost profits plus incidentals. In the case of anticipatory repudiation, damages are generally measured at time of tender.
Difference Between Contract Price and Market Price
Measured at time and place of tender of delivery.
Difference Between Contract Price and Resale Price
Standard measure of seller's damages. Good faith, commercially reasonable resale.
Lost Volume Seller (Damages for Lost Profits)
Where a seller can obtain or manufacture as many goods as they can sell, the profit lost on make only one sale versus two will be the measure of damages. Generally the contract price minus the seller's cost of the good.
Action for Price
If the buyer has not paid, or wrongfully refused to accept goods, and seller is unable to resell at reasonable price, or goods lost or damaged when the risk is on buyer, the seller is entitled to full contract price.
Other
Land sale: difference between contract price and fair market value
Employment contracts, breach by:
- Employer — full contract amount
- Employee — cost to replace employee
Construction Contracts
Breach by owner
- Before construction — builder's profits
- During construction — contract price minus price of completion
- After completion — full contract price plus interest
Breach by builder
- Before or during — completion cost and delay compensation
- Late completion — value of lost use
Part II
Nonmonetary and Other Remedies
Specific Performance
When a legal remedy is inadequate a court may award specific performance. Generally a legal remedy is considered inadequate when the contract's subject matter is rare or unique. Either party can seek this remedy.
- Available sale of land contracts
- Available for rare or unique goods
Not available for service contracts — court considers it involuntary servitude prohibited in the thirteenth amendment of the US Constitution, plus other problems of enforcement.
- injunctions under noncompete clauses (covenants) are generally allowed if the services or employment is unique and the convenant is reasonable. Reasonable defined:
- necessary to protect a legitimate interest of the party benefiting from the covenant
- reasonable in duration and geographic scope
- must not harm the public
Equitable Defenses
- Laches there is a delay in bringing an equitable action that prejudices the defendant
- Unclean Hands party bringing an equitable action has engaged in wrongdoing in the instant transaction directly related to the lawsuit
- Bona Fides Purchaser If a party buys the land or goods in good faith (i.e. is unaware of the existing dispute) the right to specific performance is cut off and plaintiff must seek damages instead
Specific Performance
An equitable remedy where the court compels the breaching party to perform. There must be a valid contract, the non-breaching party has either performed or is capable of performing, the enforcement is feasible, and remedies at law (damages) are inadequate.
UCC Buyer's Nonmonetary
- Cancellation A buyer may cancel after rejecting nonconforming goods
- Replevin of Identified Goods in the case of prepayment or inability to cover
- Prepay: (even partial) replevy if 1) seller is insolvent within 10 days of first payment
- or 2) goods for personal, family, or household
- Cover: replevy if a reasonable effort is unable to secured adequate substitute
- Specific Performance
UCC Seller's Nonmonetary
- Right to Withhold Goods on failure of buyer to make payment on or before delivery, or upon knowlege of insolvency if on credit
- Right to Recover Goods May demand from an insolvent buyer within 10 days of buyers receipt of goods
- Bailee recoveries: (bailees are typically common carries — i.e. shipping), read that section in your barbi, I've never seen this tested
Restitution
A return of value bestowed on another party to avoid unjust enrichment. Available in certain circumstances for breach of contract, unenforceable contracts, and situations where there was no contractual relationship between the parties (e.g. quasi contract).
Unenforceable or No Contract
Restitution for implied in law contracts in either quasi-contract or quantum meruit
- Restitution of value of benefit conferred
- On breach: nonbreaching party that has not fully performed may cancel and sue for restitution
- See barbri notes on "losing contracts"
- Breach by plaintiff: in certain cases restitution less damages caused by breach
- Advance Payments or Deposit if buyer is in breach
- See specific UCC rules in barbri
Quasi-Contract
A contract is unenforceable (e.g. a valid defense) or no contract involved, but unjust enrichment would otherwise result.
- Barbri examples for unenforceable
- No contract situations require: 1) plaintiff conferred a benefit; 2) with a reasonable expectation of compensation; 3) defendant knew or had reason to know of expectation; 4) defendant would be unjustly enriched.
Rescission
Equitable remedy voiding and rescinding a contract as if never made.
- For DTFs: including Mutual Mistake, Misrepresentation, Duress, Undue Influence, Illegality, Lack of Capacity, Failure of Consideration
- Unilateral Mistake if other party knew or should have known about mistake or hardship to mistaken party so extreme it outweighs other party's contract expectation
- Equitable defenses are available
Reformation
Equitable remedy where the writing is changed to conform to the original intent of the parties.
- For Mistake reformation requires 1) agreement between parties; 2) agreement to put agreement in writing; 3) variance between original agreement and writing.
- Continues…
Reformation Continued
- For Misrepresentation writing is inaccurate because of misrepresentation, plaintiff can elect contract avoidance versus reformation. Only the content or legal effect will be reformed to reflect the intent of the parties. Not reformed for misrepresentation of subject matter.
- Equitable defenses are available
UCC SOL issues
See barbri
Part III
Questions, then Cases.
Our cases this week
Gruber v. S-M News Co.
Anglia Television v. Reed
In Re WorldCom, Inc.
Peevyhouse v. Garland Coal & Mining Company
United States v. Algernon Blair. Blair
Oliver v. Campbell
Centex Homes Corp. v. Boag
Laclede Gas Co. v. Amoco Oil Co.
