Source: https://matthewminer.name/law_stuff/outlines/1L/2nd+Semester/LAW+506-002+%E2%80%93+Contracts+II/Damages
Timestamp: 2019-04-23 10:56:16+00:00

Document:
When a breach has occurred, the aggrieved party is entitled to seek remedies. While equitable remedies can be sought, courts usually prefer to award monetary damages if adequate.
Seller's Resale Including Contract for Resale.
Under the conditions stated in[UCC § 2-703] on seller's remedies, the seller may resell the goods concerned or the undelivered balance thereof. Where the resale is made in good faith and in a commercially reasonable manner the seller may recover the difference between the resale price and the contract price together with any incidental damages allowed under the provisions of this Article ([UCC § 2-710]), but less expenses saved in consequence of the buyer's breach.
Except as otherwise provided in subsection (3) or unless otherwise agreed resale may be at public or private sale including sale by way of one or more contracts to sell or of identification to an existing contract of the seller. Sale may be as a unit or in parcels and at any time and place and on any terms but every aspect of the sale including the method, manner, time, place and terms must be commercially reasonable. The resale must be reasonably identified as referring to the broken contract, but it is not necessary that the goods be in existence or that any or all of them have been identified to the contract before the breach.
Where the resale is at private sale the seller must give the buyer reasonable notification of his intention to resell.
A purchaser who buys in good faith at a resale takes the goods free of any rights of the original buyer even though the seller fails to comply with one or more of the requirements of this section.
The seller is not accountable to the buyer for any profit made on any resale. A person in the position of a seller ([UCC § 2-707]) or a buyer who has rightfully rejected or justifiably revoked acceptance must account for any excess over the amount of his security interest, as hereinafter defined ([UCC § 2-711(3)]).
Seller's Damages for Non-acceptance or Repudiation.
Subject to subsection (2) and to the provisions of this Article with respect to proof of market price ([UCC § 2-723]), the measure of damages for non-acceptance or repudiation by the buyer is the difference between the market price at the time and place for tender and the unpaid contract price together with any incidental damages provided in this Article ([UCC § 2-710]), but less expenses saved in consequence of the buyer's breach.
If the measure of damages provided in subsection (1) is inadequate to put the seller in as good a position as performance would have done then the measure of damages is the profit (including reasonable overhead) which the seller would have made from full performance by the buyer, together with any incidental damages provided in this Article ([UCC § 2-710]), due allowance for costs reasonably incurred and due credit for payments or proceeds of resale.
Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach.
Buyer's Remedies in General; Buyer's Security Interest in Rejected Goods.
recover damages for non-delivery as provided in this Article ([UCC § 2-713]).
in a proper case obtain specific performance or replevy the goods as provided in this Article ([UCC § 2-716]).
On rightful rejection or justifiable revocation of acceptance a buyer has a security interest in goods in his possession or control for any payments made on their price and any expenses reasonably incurred in their inspection, receipt, transportation, care and custody and may hold such goods and resell them in like manner as an aggrieved seller ([UCC § 2-706]).
Buyer's Damages for Non-delivery or Repudiation.
Subject to the provisions of this Article with respect to proof of market price ([UCC § 2-723]), the measure of damages for non-delivery or repudiation by the seller is the difference between the market price at the time when the buyer learned of the breach and the contract price together with any incidental and consequential damages provided in this Article ([UCC § 2-715]), but less expenses saved in consequence of the seller's breach.
Market price is to be determined as of the place for tender or, in cases of rejection after arrival or revocation of acceptance, as of the place of arrival.
Buyer's Damages for Breach in Regard to Accepted Goods.
Where the buyer has accepted goods and given notification ([UCC § 2-607(3)]) he may recover as damages for any non-conformity of tender the loss resulting in the ordinary course of events from the seller's breach as determined in any manner which is reasonable.
The measure of damages for breach of warranty is the difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if they had been as warranted, unless special circumstances show proximate damages of a different amount.
In a proper case any incidental and consequential damages under the next section may also be recovered.
Buyer's Incidental and Consequential Damages.
Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.
injury to person or property proximately resulting from any breach of warranty.
Deduction of Damages From the Price.
The buyer on notifying the seller of his intention to do so may deduct all or any part of the damages resulting from any breach of the contract from any part of the price still due under the same contract.
Proof of Market Price: Time and Place.
If an action based on anticipatory repudiation comes to trial before the time for performance with respect to some or all of the goods, any damages based on market price ([UCC § 2-708] or [UCC § 2-713]) shall be determined according to the price of such goods prevailing at the time when the aggrieved party learned of the repudiation.
If evidence of a price prevailing at the times or places described in this Article is not readily available the price prevailing within any reasonable time before or after the time described or at any other place which in commercial judgment or under usage of trade would serve as a reasonable substitute for the one described may be used, making any proper allowance for the cost of transporting the goods to or from such other place.
Evidence of a relevant price prevailing at a time or place other than the one described in this Article offered by one party is not admissible unless and until he has given the other party such notice as the court finds sufficient to prevent unfair surprise.
Expectation damages attempt to put the aggrieved party into the position it would be in if the full performance was made.
Expectation damages are the preferred form of damages, on the theory that the aggrieved party should be given the "benefit of the bargain."
Expectation damages include both direct and indirect damages.
Direct damages are equal to the difference in value between the value directly received by full performance and that actually received.
Where a seller anticipatorily repudiates a contract for the sale of goods, and the buyer does not cover, fair market value for damages is calculated at the time the buyer learns of the breach plus a commercially reasonable period of time.
Indirect damages are the amounts awarded for secondary losses resulting from a breach.
Indirect damages are classified as either incidental or consequential.
Incidental damages are extra costs incurred by an aggrieved party in dealing with a breach, such as return shipping or time spent finding a replacement.
Although attorney's fees would conceptually be incidental damages, they are not recoverable unless they are specified as recoverable in the contract, they are granted by statute, or the lawsuit is frivolous or in bad faith.
Consequential damages are any other losses incurred as a result of a breach that are not incidental damages, such as lost profit or causing a breach of another contract.
any cost or other loss that he has avoided by not having to perform.
If a breach delays the use of property and the loss in value to the injured party is not proved with reasonable certainty, he may recover damages based on the rental value of the property or on interest on the value of the property.
the reasonable cost of completing performance or of remedying the defects if that cost is not clearly disproportionate to the probable loss in value to him.
If a breach is of a promise conditioned on a fortuitous event and it is uncertain whether the event would have occurred had there been no breach, the injured party may recover damages based on the value of the conditional right at the time of breach.
Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.
A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.
Employer hires employee for two-year contract at $50,000/year, but employer wrongfully terminates him six months in. Employee looks for new job for three months unsuccessfully, then hires an employment agency for $1,000 and finds a new job paying $45,000 per year.
If the employee did not look for work, he could not recover for that time, as there is a duty to mitigate damages.
Employer hires employee for two-year contract at $50,000/year, but employee wrongfully quits six months in. Employer looks for a replacement for three months unsuccessfully, then hires an employment agency for $2,000 and finds a temp replacement for $30,000 for three months, then hires a permanent replacement for $55,000 per year.
Some damages will not fit this formula exactly though.
Reliance damage attempt to put the aggrieved party into the position that it would have been in if the parties had not entered into the contract.
Reliance damages compensate for expenses incurred by the aggrieved party in reliance on the existence of the contract, as well as lost opportunity costs, if provable.
While expectation damages are preferred, reliance damages may be used if there are no identifiable expectation damages or when the promise is enforced based on reliance.
As an alternative to the measure of damages stated in [R2C § 347], the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.
Restitution damages attempt to put the aggrieved parties into position that they were in before the contract was entered into.
In any case governed by the rules stated in this Chapter, either party may have a claim for relief including restitution under the rules stated in [R2C § 240] and [R2C § 377].
In any case governed by the rules stated in this Chapter, if those rules together with the rules stated in Chapter 16 will not avoid injustice, the court may grant relief on such terms as justice requires including protection of the parties' reliance interests.
Subject to the rule stated in Subsection (2), if a party justifiably refuses to perform on the ground that his remaining duties of performance have been discharged by the other party's breach, the party in breach is entitled to restitution for any benefit that he has conferred by way of part performance or reliance in excess of the loss that he has caused by his own breach.
To the extent that, under the manifested assent of the parties, a party's performance is to be retained in the case of breach, that party is not entitled to restitution if the value of the performance as liquidated damages is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss.
the extent to which the other party's property has been increased in value or his other interests advanced.
Liquidation or Limitation of Damages; Deposits.
Damages for breach by either party may be liquidated in the agreement but only at an amount which is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy. A term fixing unreasonably large liquidated damages is void as a penalty.
in the absence of such terms, twenty per cent of the value of the total performance for which the buyer is obligated under the contract or $500, whichever is smaller.
the amount or value of any benefits received by the buyer directly or indirectly by reason of the contract.
Where a seller has received payment in goods their reasonable value or the proceeds of their resale shall be treated as payments for the purposes of subsection (2); but if the seller has notice of the buyer's breach before reselling goods received in part performance, his resale is subject to the conditions laid down in this Article on resale by an aggrieved seller ([UCC § 2-706]).
Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.
A term in a bond providing for an amount of money as a penalty for non-occurrence of the condition of the bond is unenforceable on grounds of public policy to the extent that the amount exceeds the loss caused by such non-occurrence.
Specific performance or an injunction may be granted to enforce a duty even though there is a provision for liquidated damages for breach of that duty.

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