Enforcing Contracts Chapter 14

Types of Breach/Remedies Major Breach Rescission and restitution – cancel contract/give back what was received Money damages – pay to compensate for injury Specific performance – court order requiring the party to do what was promised

Types of Money Damages #1 Compensatory: Puts you back on same level as before the breach (limits harm to either party) Consequential: Money awarded for foreseeable injuries (lost profit for an incomplete sale)

Types of Money Damages #2 Liquidated: Money paid if a certain breach occurs (if you fail to pay by a certain date, I get to keep what you have paid) Punitive: added to other damages to punish other party (dishonest seller who misrepresented item) Nominal: small amount awarded when there is no actual injury

Specific Performance Court will order a party to perform as promised Given when money damages inadequate (can’t get an item from many places, (etc.) Given when subject matter is unique (a 1932 Rolls Royce purchase, real property Court must be able to supervise the performance

Denial of Remedy You must choose a remedy when you sue for breach. Cannot get damages and specific performance for the same breach. Rescission and restitution place you in the pre- contract position so there are no damages available Restitution and specific performance are opposites

Think for a minute On a sheet of paper or in your notes, write down two things about how remedies work

Mitigate Damages Act to reduce or limit your injury Must try to re-rent an apartment Must try to find another supplier Must try to find comparable job

Statute of Limitations Must begin action to recover damages in a specific period of time Four years is common for contracts Three years is common for torts UCC requires an action on a sales contract begin within four years after the breach.

Bankruptcy Effect A person can be released from the obligations if they meet certain criteria in court Get a fresh start; creditors get a share of your assets

Review Comic strip time You will create a five panel comic strip using words and images to represent one topic in this chapter.

Homework Page Can use a homework pass if you have one Be familiar with the chart at the top of this page