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LAW 122 (625)
Chapter 12

Chapter 12CONTRACTUAL REMEDIES.doc

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Department
Law and Business
Course
LAW 122
Professor
Theresa Miedema
Semester
Fall

Description
Chapter 12 CONTRACTUAL REMEDIES DAMAGES Damages: is an award of money that is intended to cure a wrongful event, such as a breach of contract  Plaintiff does not receive exact thing but monetary value of that thing  Reasons why courts award monetary damages for breach of contract o The courts of law historically did not have the power to compel a defendant to do anything other than pay money o Contracts traditionally were seen as a commercial arrangement between business people o Third especially in the business world it would often be inconvenient to award something other than monetary damages EXPECTATION DAMAGES Expectation damages: represent the monetary value of the benefit that the plaintiff expected to receive under the contract  Expectation damages are forward looking because they intended to place the plaintiff in the position that it expected to be in after the contract was properly performed  Compensatory damages in tort law are backward looking because they are intended to place the plaintiff I the position that It was in before the defendant acted wrongfully o Backward looking damages are easily justified, they allow the plaintiff to recover the value of something such as a favorable reputation o Forward looking, allow the plaintiff to recover the value of something that it never previously enjoyed by merely expected to receive under its contract with the defendant o Expectation damages therefore provide an assurance that if a promise is not actually fulfilled, the innocent party will at least be able to recover the monetary value of the promise EXPECTATION = Expected benefits - Costs under the DAMAGES under the contract contract Five issues:  Difficulty of calculation  Costs of cure or loss of value  Intangible losses  Remoteness  Mitigation of damages Difficulty of calculation • Expectation damages are usually available even if they are very difficult to calculate • If the calculation is entirely speculative the court will not award damages Costs of cure or loss of value  Most likely to do so if the plaintiff has a legitimate interest in having the work done or if the plaintiff has actually already spent money curing the defendants defective performance Intangible losses  Intangible losses: is a loss that does not have any apparent economic value  Ex. anger frustration, disappointment when promises are broken  Historically the courts do not award damages for intangible losses  Recently however the courts have stated to recognize that “peace of mind” is one of the things that a person may expect to receive under a contract  Damages can be awarded to plaintiff if it caused distress Remoteness  Remote: if it would be unfair to hold the defendant legally responsible  A loss is not remote if the defendant either should have known or actually did know that it was the sort of loss that might occur if the contract was breached o First liability may be imposed if a reasonable person would have known that the plaintiffs loss might result form a breach o Second, liability may be imposed if the defendant actually knew that the plaintiffs loss might result from the breach o Victoria laundry v. Newman industries o Remoteness is a principle of fairness o Before entering into a contract, you should make sure that the other party is aware of any unusual losses that you might suffer as a result of its breach o The other party may demand a higher price or even refuse to enter into the agreement, but if you do not draw attention to the possibility of an unusual loss you will not be able to recover expectations damages if that loss results Mitigation of damages  Mitigation: occurs when the plaintiff takes steps to minimize the losses flowing from the defendants breach  1. Lawyers sometimes say that there is a duty to mitigate the plaintiff is not required to mitigate, failing to do so is a poor business decision  2. the plaintiff is responsible only for taking reasonable steps to mitigate a loss  3. damages are denied only to the extent that the plaintiff unreasonably failed to mitigate Reliance Damages (don’t worry about it)  Reliance damages: represent the monetary value of the expenses that the plaintiff wasted under a contract  Opposite of expectation damages  If ask for expectation damages you are asking” give me what I
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