remedies for breach of traditional and online contracts
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Remedies for Breach of Traditional and Online Contracts. Chapter 8. Performance and Breach. If a contractual duty has not been discharged or excused, the contracting party owes an absolute duty (covenant) to perform the duty. - PowerPoint PPT PresentationTRANSCRIPT
Contract Law for Paralegals: Traditional and E-Contracts
© 2009 Pearson Education, Upper Saddle River, NJ 07458.All rights reserved
Remedies for Breach of Traditional and Online Contracts
Chapter 8
16 - 2Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Performance and Breach
If a contractual duty has not been discharged or excused, the contracting party owes an absolute duty (covenant) to perform the duty.
Breach of contract occurs when a contracting party fails to perform an absolute duty owed under a contract.
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Types of Performance
Complete Complete PerformancePerformance
Substantial Substantial PerformancePerformance
Inferior PerformanceInferior Performance
16 - 4Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Complete Performance
Most contracts are discharged by strict performance.
A fully performed contract is an executed contract.
Tender of performance discharges contractual obligations.
16 - 5Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Substantial Performance
This occurs when there is a minor breach of contract. Performance deviates slightly from
complete performance. Nonbreaching party may recover
damages.
16 - 6Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Inferior Performance
This is a material breach of contractual obligations.
Nonbreaching party may rescind contract and seek restitution.
Nonbreaching party is excused from any further performance.
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Summary: Types of PerformanceType of Performance
Legal Consequence
Complete Performance
The contract is discharged.
Substantial Performance (minor breach)
The non-breaching party may recover damages caused by the breach.
Inferior Performance (material breach)
The non-breaching party may either:
(1) Rescind the contract and recover restitution, or
(2) Affirm the contract and recover damages.
16 - 8Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Anticipatory Breach
A breach that occurs when one contracting party informs the other that he or she will not perform his or her contractual duties when due.
Also called anticipatory repudiation. Nonbreaching party’s duties are immediately
discharged. Nonbreaching party may sue repudiating party
at time of breach.
16 - 9Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Monetary Damages
A non-breaching party may recover monetary damages from a breaching party.
Monetary damages are available whether the breach was minor or material.
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Types of Monetary Damages
Compensatory Damages
Consequential Damages
Nominal Damages
Liquidated Damages
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Compensatory Damages
Award of money intended to compensate a non-breaching party for the loss of the bargain.
They place the non-breaching party in the same position as if the contract had been fully performed by restoring the “benefit of the bargain.”
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Compensatory Damages (continued)
The amount of that will be awarded for breach of contract depends on: The type of contract involved, and Which party breached the contract.
Special types of contracts: Sale of Goods Construction Contracts Employment contracts
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Mitigation of Damages
A non-breaching party is under a legal duty to avoid or reduce damages caused by a breach of contract.
The extent of mitigation depends on the type contract involved.
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Consequential Damages
Foreseeable damages that arise from circumstances outside the contract.
To be liable for these damages, The breaching party must know or
have reason to know that the breach will cause special damages to the other party.
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Liquidated Damages
Damages to which parties to a contract agree in advance if the contract is breached.
To be lawful, The actual damages must be difficult
or impracticable to determine, and The liquidated amount must be
reasonable in the circumstances.
16 - 16Reed/Cheeseman: Contract Law for Paralegals © 2009 Pearson Education, Upper Saddle River, NJ 07458.
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Nominal Damages
Damages awarded when the non-breaching party sues the breaching party even though no financial loss has resulted from the breach.
Usually awarded in a small amount, such as $1.
Cases involving nominal damages are usually brought on “principle.”
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Enforcement of Remedies
If the breaching party refuses to pay the court ordered judgment, the court may issue: Writ of Attachment Writ of Garnishment
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Enforcement of Remedies (continued)
Writ of Attachment Orders the sheriff to
Seize property in the possession of the breaching party that he or she owns, and
To sell the property at auction to satisfy the judgment.
Writ of Garnishment Orders that
Wages, bank accounts, or other property of the breaching party that is in the hands of third parties be paid over to the non-breaching party to satisfy the judgment.
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Rescission and Restitution
Rescission An action to undo
the contract. Available if there has
been: A material breach
of contract Fraud Undue influence Mistake
Restitution Returning of goods
or property received from the other party to rescind a contract.
If the actual goods or property is not available, a cash equivalent must be made.
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Equitable Remedies
Equitable remedies are available if there has been a breach of contract that cannot be adequately compensated by a legal remedy.
They are also available to prevent unjust enrichment.
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Specific Performance
Court orders the breaching party to perform the acts promised in the contract.
The subject matter of the contract must be unique.
Specific performance of personal contracts are usually not granted because it will be difficult to monitor performance.
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Reformation
Court rewrites a contract to express the parties’ true intentions.
Usually used to correct clerical errors.
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Injunction
Court order that prohibits a party from doing a certain act.
Available in contract actions only in limited circumstances.
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Torts Associated With Contracts
Intentional Interference with Contractual Relations
Breach of the Implied Covenant of Good Faith and Fair Dealing
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Intentional Interference with Contractual Relations A tort that arises when a third party
induces a contracting party to breach the contract with another party.
The following elements must be shown: A valid, enforceable contract between the
contracting parties. Third-party knowledge of this contract. Third-party inducement to breach the contract.
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Breach of the Implied Covenant of Good Faith and Fair Dealing Under this covenant:
The parties to a contract are held to the express terms of the contract, and
They are also required to act in good faith and deal fairly in all respects in obtaining the contract.
A breach of this implied covenant is a tort for which tort damages are recoverable.