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Lecture

ADMS 2610 Lecture Notes - Rescission, Syllogism, Specific Performance


Department
Administrative Studies
Course Code
ADMS 2610
Professor
Robert Levine

Page:
of 3
ADMS2610
Session 3
Chapter 14 (pg. 247-261)
Breach of Contract and remedies
Nature of Breach of Contract
- The express or implied refusal to carry out a promise made under a contract
is a form of discharge
- Breach
o A right to damages, rescission or both
- Repudiation (a refusal to perform a contract)
o Can be expressed or implied
o When a party expressly repudiates a promise to perform, it is said to
be an express breach
- Condition (an essential term of a contract)
o Breach of which allows the other party to end the contract
- Anticipatory Breach (an advance determination that a party will not
perform when the time for performance arrives)
o If anticipatory breach of a condition, may end the contract or continue
with the contract
o If continue, one takes the chance the contract may be discharged in
another way in the interim
- Repudiation (Implied)
o Occurs when the repudiation must be ascertained from the actions of
a party or implied from statements made before the time fixed for
performance
- Doctrine of Substantial Performance
o Cannot rescind a contract if it has been substantially performed
- Subsidiary Promise
o Warranties where a sale of goods is concerned
o Allow for damages but not rescission
Fundamental Breach a breach of the contract that goes to the root of the
agreement
- Allows injured party to rescind contract and sue for damages
- Exemption clauses:
o Construed strictly against the party who inserted them (especially in
standard form marketplace contracts)
o Allows parties to avoid exemption clauses
o Depends on the construction of the contract
Depends on the wording of the exemption clause
- Warranty (in the sale of goods, a minor term in a contract, the breach of
which allows one to sue for damages but not rescission)
o Conditions may become warranties
Remedies
- Compensation
o Rights of injured party to sue for compensation for the loss suffered
o Loss or injury must be proven
o Courts attempt to place party into position would have been had the
contract been performed (restore to original position)
o Restitutio in Integrum (to restore or return a party to an original
position)
o Can take the form of monetary damages, specific performance or
quantum meruit
Types of Damages
- General Damages (restitution for losses naturally expected from a breach of
contract)
o Put party into position they would have been had the contract been
performed
o Represents compensation for losses
o Losses must flow naturally from the breach, can not be too remote
- Special Damages (specific damages that would flow from a breach of
contract)
o Do not arise naturally or generally from the normal course of events
following such a breach
- Punitive Damages (not compensation but rather punishment when
defendant’s actions were deceitful, malicious or offensive)
Extent of Liability for LossReasonable Foreseeability
- What is the extent of the liability that flows from the breach of a contract
- Where do we draw the line
- Damages cannot be too remote
- Contemplation Test
o Reasonable foreseeability
o Damages recoverable of those that the parties may reasonably
contemplate as flowing from such breach
- Special Circumstances
o Any loss that might occur from special circumstances relating to the
contract that both parties might reasonably be expected to
contemplate at the time the contact is made
- The 2 tests are now rolled into one
Mitigation the obligation of an injured party to reduce the loss flowing from a
breach of contract
- Must takes steps to mitigate losses
- Find a new buyer
- Find a new seller
Liquidated Damages a bona fide estimate of the monetary damages that would
flow from the breach of a contract and agreed to as per term of the contract
- An attempt by the parties to estimate damages in the case of a breach
- Deposits may be an example
- Penalty Clauses
o Are enforceable as they are akin to punitive damages which are not
allowed for ordinary breaches of contract
o Must be some relation between amount estimated and actual loss
o Difference between part-payments and deposits
Remedies for Particular Situations
- Specific Performance (an equitable remedy of the court that may be
granted for breach of contract where money damages would be inadequate,
and that requires the defendant to carry out the agreement according to its
terms)
o Discretionary remedy
o Force the party to do something they agreed to do
o Must be a unique subject matter
Land, antiques, rare goods, unique art
- Injunction (an equitable remedy of the court that orders the person or
persons named therein to refrain from doing certain acts)
o Prevent party from doing something they agreed not to do
o Discretionary remedy
- Quantum Meruit “as much as he has earned”
o Usually in situations of services or mixed goods and services
o Remedy not based on the contract but upon quasi-contract
o Available if contract has been partly performed
o Courts concerned with compensation for the work performed