Contract Remedies: Protection of Interests and Damages - Prof. Kerry J. Redican, Study notes of History of Education

Download Contract Remedies: Protection of Interests and Damages - Prof. Kerry J. Redican and more Study notes History of Education in PDF only on Docsity! Chapter 18 - Remedies Focus: How to help an injured party (plaintiff), without unfairly harming the other party (defendant), is the focus of remedies. Someone breaches a contract when he fails to perform a duty, without a valid excuse. A remedy is the method a court uses to compensate the non-breaching “injured” party. Four principal contract interests (legal rights) that a court may seek to protect: 1. Expectation Interest – “benefit of the bargain”/lost profits – what the non- breaching party would have received if the deal had been fully performed. The most common form of remedy awarded by courts. Calculated by determining the net expected profit, deducting what would have been necessary expenses from the expected gross revenue. Three potential parts of an expectation damages award include: i. compensatory damages (also called direct damages) ii. consequential damages (also called special damages) – must be foreseeable and reasonably contemplated by both parties when they made the contract (Hadley v. Baxendale) iii. incidental damages 2. Reliance Interest – Where expectation damages may be speculative and cannot be proved with reasonable certainty, a court will not award expectation damages, but might instead award the non-breaching party the amount of money she expended in reliance upon the other party’s expected performance under the contract – compensation for out-of-pocket expenses. Reliance damages attempt to put the parties in the same position they were in before they entered into the contract. 3. Restitution Interest – If the non-breaching party is unable to show an expectation interest or reliance, she still may be able to show that by entering into the contract she bestowed a benefit on the breaching party, which in fairness should be returned to the non-breaching party. 4. Equitable Interest – Non-money damages, including specific performance or an injunction Under the UCC: Seller’s Remedies: (1) resell the goods and sue for the difference between the actual sales price and the contract sales price; (2) keep the goods and sue for the difference between what the goods could be sold for, and what the contract sales price was. In either case, damage award amounts to the benefit of the bargain. Sellers are generally not entitled to consequential damages. Sellers may recover incidental damages. 1