Remedies of the Injured Party Section 12.2. Understanding Business and Personal Law Remedies of the Injured Party Section 12.2 Transfer of Contracts and

Remedies of the Injured Party Remedies of the Injured Party Section 12.2Section 12.2

Understanding Business and Personal Law


Transfer of Contracts and Remedies for Breach

What You’ll Learn

How to explain the concept of How to explain the concept of anticipatory breach (p. 250)anticipatory breach (p. 250)

How to identify remedies available for How to identify remedies available for breach of contract (p. 250)breach of contract (p. 250)




What You’ll Learn

How to define specific performance How to define specific performance (p. 253)(p. 253)

Why you must minimize the damages Why you must minimize the damages involved in a breach of contract (p. 252)involved in a breach of contract (p. 252)




Why It’s Important

Understanding the remedies available when Understanding the remedies available when a contract is breached will help you pursue a contract is breached will help you pursue satisfaction if this happens to you.satisfaction if this happens to you.




Legal Terms

breach of contract (p. 250)breach of contract (p. 250)anticipatory breach (p. 250)anticipatory breach (p. 250)damages (p. 251)damages (p. 251)actual damages (p. 251)actual damages (p. 251)incidental damages (p. 251)incidental damages (p. 251)




Legal Terms

liquidated damages (p. 251)liquidated damages (p. 251)mitigation of damages (p. 253)mitigation of damages (p. 253)specific performance (p.253)specific performance (p.253)injunction (p. 255)injunction (p. 255)




Breach of Contract

Damages Acceptance of BreachMoney DamagesActual and Incidental DamagesLiquidated Damages

Section OutlineSection Outline




Minimizing Damages

Equitable Remedies Specific PerformanceInjunction

Section OutlineSection Outline




Pre-Learning Question Pre-Learning Question

What is a breach of contract?




A A breach of contractbreach of contract occurs when occurs when one party to a contract fails to perform one party to a contract fails to perform the duties set out in the terms of the the duties set out in the terms of the agreement.agreement.

Breach of Contract Breach of Contract




Sometimes parties to a contract notify Sometimes parties to a contract notify the other that they will not go through the other that they will not go through with the contract before the time for with the contract before the time for performance. performance.





They have breached, or violated, the They have breached, or violated, the agreement before they were required agreement before they were required to act. to act.

This is called This is called anticipatory breachanticipatory breach..






What do you think happens when a contract has been breached?




When a contract is breached, the When a contract is breached, the injured party has a choice of injured party has a choice of remedies. remedies.

A remedy is a legal means of A remedy is a legal means of enforcing a right or correcting a enforcing a right or correcting a wrong.wrong.

Damages Damages




The injured party has three options:The injured party has three options:

Damages Damages

1.1. accept the breachaccept the breach2.2. sue for money damagessue for money damages3.3. ask the court for an equitable ask the court for an equitable

remedyremedy




If one party breaches a contract, the If one party breaches a contract, the other party has an excuse not to other party has an excuse not to perform and may simply accept the perform and may simply accept the breach and consider the contract breach and consider the contract discharged. discharged.

Acceptance of Breach Acceptance of Breach




DamagesDamages are payment recovered in are payment recovered in court by a person who has suffered an court by a person who has suffered an injury.injury.

Money Damages Money Damages




If you suffer a loss as the injured If you suffer a loss as the injured party, you may sue for money party, you may sue for money damages resulting from the breach of damages resulting from the breach of contract. contract.





The money damages should, by law, The money damages should, by law, place you in the position you would place you in the position you would have been in if the contract had been have been in if the contract had been carried out.carried out.





To recover damages, the injured party To recover damages, the injured party must make tender; that is, the injured must make tender; that is, the injured party must offer to do what he or she party must offer to do what he or she agreed to do under the contract.agreed to do under the contract.






Categories of damages include:Categories of damages include:

Actual Liquidated

Compensatory Nominal

Consequential Punitive

Incidental Speculative




Actual and Incidental Damages Actual and Incidental Damages

Actual damagesActual damages are damages are damages directly attributable to another party’s directly attributable to another party’s breach of contract.breach of contract.





If a seller of goods breaches a If a seller of goods breaches a contract, the measure of damages for contract, the measure of damages for the buyer is the difference between the buyer is the difference between the market price at the time of the the market price at the time of the breach and the contract price, plus breach and the contract price, plus incidental damages.incidental damages.





Incidental damagesIncidental damages are any are any reasonable expenses, resulting from a reasonable expenses, resulting from a breach, that have been incurred by breach, that have been incurred by the buyer.the buyer.




Liquidated Damages Liquidated Damages

Damages agreed upon by the parties Damages agreed upon by the parties when they first enter into a contract when they first enter into a contract are called are called liquidated damagesliquidated damages..





How can a party minimize the damages that result from a breach of contract?




The principle of The principle of mitigation of mitigation of damagesdamages states that even if you are states that even if you are the innocent party, you must try to the innocent party, you must try to minimize damages that might result minimize damages that might result from the other party’s failure of from the other party’s failure of performance.performance.

Minimizing Damages Minimizing Damages




By minimizing damages, the innocent By minimizing damages, the innocent party is protecting the other party from party is protecting the other party from any unnecessary losses.any unnecessary losses.

Minimizing Damages Minimizing Damages




Name two types of money damages.




ANSWERANSWER

Any two of the following: actual, compensatory, consequential, incidental, liquidated, nominal, punitive, and speculative.





When do you think equitable remedies are used?




The remedy of money damages is not The remedy of money damages is not always enough to repay an injured always enough to repay an injured party for breach of contract. In these party for breach of contract. In these cases, the injured party may seek an cases, the injured party may seek an equitable remedy.equitable remedy.

Equitable Remedies Equitable Remedies




Two equitable remedies are:Two equitable remedies are:

Equitable Remedies Equitable Remedies

specific performancespecific performancean injunction an injunction




When the remedy of money damages When the remedy of money damages is not enough to repay a breach of is not enough to repay a breach of contract, one party may sue the other contract, one party may sue the other for specific performance.for specific performance.

Specific Performance Specific Performance




Specific performanceSpecific performance means asking means asking the court to order the other party to do the court to order the other party to do specifically what he or she originally specifically what he or she originally agreed to do.agreed to do.

Specific Performance Specific Performance




An An injunctioninjunction is a court order that is a court order that prevents a party from performing an prevents a party from performing an act of some sort. act of some sort.

Injunction Injunction




An injunction An injunction

Injunction Injunction

is only available in special is only available in special circumstances, such as when circumstances, such as when money damages are inadequate money damages are inadequate compensation.compensation.may be temporary or permanent may be temporary or permanent




Ping contracted to deliver 200 gallons of black berries to the Just Natural Jams and Jellies company, and Just Natural could only accept 100 gallons.




What is Ping obligated to do under the mitigation of damages principle?




Try to find another buyer for the remainder of the black berries.

ANSWERANSWER




Reviewing What You Learned

1. What is involved in an anticipatory breach of a contract?

Section 12.2 Assessment





One party to a contract notifies the other party of his or her intention not to go along with the terms of the contract.


Answer





2. What remedies are available to an innocent party when a breach of contract occurs?






Money damages and equitable remedies.


Answer





3. What is specific performance?






It requires the other party to carry out the terms of the contract as originally agreed.


Answer





4. Why is it necessary to minimize the damages involved in a breach of contract?






Answers may vary but should recognize that minimizing damages protects the other party from unnecessary losses.


Answer





Critical Thinking ActivityDamages What is the principle that forms the basis of the theory of damages in contract law?





Critical Thinking Activity AnswerDamages Answers will vary but should recognize that money damages should place you in the position you would have been in if the contract had been carried out.





Legal Skills in ActionAnticipatory Breach Harriet Iafigliano owes your friend, Andy, $500 that she is supposed to pay him on May 20. Harriet sent an e-mail to Andy in April indicating that she could not pay him on that date.





Legal Skills in ActionAnticipatory Breach Andy believes that the doctrine of anticipatory breach applies in this situation. Write a letter to Andy explaining whether anticipatory breach applies in his case.





Letters will vary but should include that because Harriet informed Andy in advance of the agreed date that she was to pay him, that she wouldn’t be able to pay him, anticipatory breach does apply.

Legal Skills in Action AnswerAnticipatory Breach

Remedies of the Injured Party Remedies of the Injured Party End of Section 12.2End of Section 12.2

Documents

Remedies of the Injured Party Section 12.2. Understanding Business and Personal Law Remedies of the Injured Party Section 12.2 Transfer of Contracts and