CONTRACT REMEDIES
I. Overview (measure of the damages is the
A. Approach:
1. Determine what substantive area
of law involved
a. Torts, K, related real estate
b. Always separate the two, and
look for both
2. What specific type of problem is
at issue w/ substantive area
(What kind of Tort or K?)
3. Make sure that P has a case.
Must discuss substantive law
before remedies.
4. Determine which remedies
require discussion. Each type of
remedy gets own heading.
B. Discuss in the chronological
order:
1. Legal remedies
2. Restitutionary remedies
a. First three are legal, last two
are equitable
3. Pure equitable remedies:
regarded as extraordinary form of
relief. Courts wont give unless no
viable legal remedy
II. Legal Remedies (Damages)
A. Compensatory Damages: P is
entitled to compensatory
damages to put her in the
position she would have been in
had this wrong not occurred. On
these facts
1. Preliminary Requirements:
a. Causation
i. Actual: but for test, actual
causation
b. Proximate Causation:
foreseeability at time of
contract formation
c. Certainty: damages cannot
be too speculative
d. Duty to Mitigate: damages
that could have been avoided
w/out an undue burden on the
P are not recoverable
2. Direct Damages: those that flow
inherently from the wrong
2. Look for: whether the amount is
expectation interest)
3. Consequential Damages:
Available for related damages
foreseeable at the time of
formation (lost future profits,
etc.)
a. Look For: The lost reputation
fact pattern
i. Luxury developer hires a
builder who intentionally
uses substandard inferior
materials
ii. Seriously damages Ps
reputation in addition to his
profits loss
iii. Will affect future profits
on Ps other projects
iv. Can get consequential
damages here if they were
foreseeable
4. Incidental Damages: costs
incurred dealing with a breach
are always recoverable,
regardless of foreseeabiilty.
5. Reliance Damages: put P in the
same economic position as if K
had never happened. Allowed in
cases where expectation damages
would be too speculative.
B. Nominal Damages
1. No one sues for breach of K
under nominal damage theory
2. Throw it in if you have time, but
dont spend a lot of time on it
C. Punitive Damages: NO punitive
damages in K law
1. But if it is willful, bad, or
fraudulent, then characterize as
a tort to obtain punitive damages
D. Liquidated Damage Clause
1. General Rule: clause is
enforceable so long as its not a
penalty AND
a. Damages are very difficult to
ascertain at the time of K
formation
b. The clause was a reasonable
forecast of what they would be
a single set sum of $$ or a
$1k/day penalty
a. The set sum is presumptively
INVALID, Range or formula is
usually ok
3. If Valid: only liquidated amount
is available.
i. Note: while a valid
liquidated damages award
will preclude P from
getting actual damages, it
will not preclude P from
getting specific
performance unless the K
specifically provides that
this damages amount is to
be the ONLY valid.
4. If Invalid: only actual
compensatory damages are
available
a. Trick Question: the clause
provides that P can get either
actual OR liquidated damages
this is an INVALID clause.
Give P actual damages.
III. Restitutionary Remedies
A. Purpose is to prevent unjust
enrichment
B. Legal
1. Restitutionary Damages
2. Replevin
3. Ejectment
C. Equitable
1. Constructive Trusts
2. Equitable Liens
D. Only one fact pattern: Where P
has already rendered
performance of the contract, and
the contract then fails after
performance (so want to prevent
unjust enrichment). Contract fails
in two ways:
1. The K itself is unenforceable
(mistake, capacity, SoF, illegality)
a. Option #1:
i. P can get restitutionary
damages for the value of
the benefit to D (not the
price of the K), whether D
used it or not.
(a) It is okay if the value
of the benefit is greater
than the actual contract
value
b. Option #2:
i. P gets her property back if
it is unique or the D is
insolvent
2. The K is breached
a. If P is non-breaching party
(same as if K is unenforceable)
b. If P is breaching party (no
majority. About 50:50) (USE
BOTH)
i. Traditional view: no
recovery
ii. Modern view: recovery
allowed, but can NOT be
greater than the K rate
AND it will be reduced by
the injury suffered by D as
a result of Ps breach
1
IV. Equitable RemediesSPECIFIC
PERFORMANCE
A. Cha Cha Is My Favorite Dance
B. Contract MUST be valid,
certain, definite
1. P must be able to show the K
terms with more certainty and
definiteness than would be
necessary in an action for money
damages
C. CONTRACT CONDITIONS OF P MUST
BE SATISFIED
1. P must show that her K
conditions have been fulfilled
(already performed, ready and
able to perform or excused from
performing)
2. TIP: fact patterns often involve
land sale contracts
a. Seller cant deliver the
amount of land promised
(agreed upon consideration)
in the K (deficiencies fact
pattern)
i. P is the Seller:

(a) Can get specific
performance and
enforce the K if the
defect is minor (999
acres versus 1000
acres)
(b) Cannot get specific
performance if the
contract defect is major
unless seller can cure
the defect before
closing
ii. P is the Buyer:
(a) May specifically
enforce even if the
defect is major
(b) Cannot enforce if the
defect is VERY major
(Cant take 200 instead
of 1000 acres)
(c) TIP: if you decide SP
should be granted
under the rules above,
even though a defect D. INADEQUATE LEGAL REMEDY
still remains, MUST ALTERNATIVE
1. Inadequate because:
include a sentence
noting that the court
will lower the purchase
price to take into
account the defect in
consideration (Buzz
word: abatement in
purchase price)
b. Time is of the essence 2. Unique Property:
clause
i. Fact pattern: 1) time is of
the essence clause 2) w/ a
forfeiture provision that
makes the K forfeited if not
delivered on time, 3) Buyer
partially performs, will
come in with a late
payment but this triggers
the clause 4) Seller
wants to keep both land
and any performance
ii. Buyer will bring a lawsuit
for specific performance
(a) Buyer will USUALLY
get SP
CONTRACT
(b) If court does not give
SP, the modern trend
will give P restitutionary
relief
iii. Equitable Maxim: Equity
abhors forfeiture: Factors
Court will look at to AVOID
the harsh result of a
forfeiture:
(a) Loss to seller is small
(b) Tardiness is de
minimus
(c) Waiver: seller has
accepted late payments
in the past
(d) Buyer would suffer
undue hardship
iv. NOTE: fall back on
restitutionary relief if cant E. MUTUALITY OF REMEDY
get SP.
v. NOTE: if K fully performed,
time of essence clause
strictly enforced
a. Damages are too speculative
b. D is insolvent
c. Avoidance of multiplicity of
lawsuits
d. The thing bargained for is
unique most important for K
law
a. Real Property is ALWAYS
unique
i. Test give you fact patterns
that make the land look
NOT unique but it always is
ii. Special seller rule: Seller
can get SP too even though
all they have coming is
money (purchase price)
b. Personal Property
i. General rule: personal
property is NOT unique
(therefore, money
damages are sufficient)
ii. Exceptions:
REMEDIES
(a) One of a kind or very G. DEFENSES
rare
(b) Personal
significance to buyer
(c) Circumstances make
chattel unique
(d) NOTE: Uniqueness is
tested @ time of
litigation NOT at the
time of K formation
3. Liquidated Damage Clauses
a. Mere existence of a valid
clause itself does not
preclude specific performance
(and therefore that money
damages are adequate),
UNLESS the clause says that
this is to be the only remedy
1. Fact pattern: will look EXACTLY
like this: 1) B who is 17 enters
into a K to buy land from D, 2) D
refuses to convey, 3) and B brings
an action for SP
a. First: indicate there is
mutuality fact pattern, one
where the D argues P should
not be able to enforce this
contract against me b/c I could
not enforce it against him
i. D would not have been able
to enforce against B
because B is incapable
b. Second: court will reject the
mutuality argument if it feels
secure that the P can and will
perform (despite minority)
c. Third: GRANT specific
performance but have the
decree provide for
simultaneous performance
F. FEASIBILITY OF ENFORCEMENT
1. Personal services contracts
are NOT specifically enforceable
2. Covenants not to compete
ARE enforceable IF:
a. Protects legitimate interest
b. Services provided are unique
c. Geographic and durational
scope are reasonable
1. Equitable defenses
a. Unclean hands
b. Laches
c. Unconscionability: Must be
really bad, tested @ time of K
formation. Unfair surprise
2. Contract Defenses
a. Mistake
b. Misrepresentation
c. Statute of Frauds: Part
performance
i. How to spot the issue: it
will be an oral K for land or
a testamentary disposition
of land, and there was
partial performance. First,
raise SoF defense, then
analyze below.
ii. Rule: if one has rendered
(a) Valuable part
performance
(b) In reliance on the K
(c) This will take the case
out of the SoF and SP
will be granted
2
iii. What is valuable Part
performance (2 of 3)
(a) Payment (in whole or
in part)
(b) Possession
(c) Made Valuable
Improvements
(d) Modern trend:
Valuable services alone
will suffice if you take
care of me until I die, I
will convey you my
land
H. ONE SPECIFIC ISSUES
1. Equitable Conversion the
moment the land sale K is signed
(upon execution) buyer has a real
property interest and seller has a
personal property interest
a. Death: if seller dies, estate
gets purchase money, if buyer
dies, estate gets real property
b. Damage/destruction:
Majority: buyer bears the risk.

Modern trend is the risk is on
the seller
V. EQUITABLE REMEDIESRESCISSION
& REFORMATION
A. RESCISSION (Good Dog)
1. Grounds: Determine if there are
grounds for rescission (will be a
formation defect)
a. Mutual Mistake
i. Mistake of material fact:
rescission GRANTED
ii. Mistake is about a
collateral fact: rescission
DENIED
(a) Fact goes to quality,
desirability, fitness of
prop for a particular
purpose
b. Unilateral Mistake
i. General Rule: Rescission
DENIED
(a) Exception: non-
mistaken party knows or
should have known of
the mistake (palatable
mistake)
(i) Modern trend: req B. REFORMATION (Very Good Dog)
proof the mistaken
party would suffer
undue hardship if
there is no rescission
c. Misrepresentation
i. General Rule: rescission
granted, P must show she
actually relied
d. Coercion
e. Undue influence
f. Lack of capacity
g. Failure of consideration
h. Illegality
2. Defenses
a. Unclean hands, Laches
b. NOTE: Negligence of the
Plaintiff is NOT a defense, the
subcontractor left out a zero in
his bid, DOESNT MATTER!
3. Specific Issues
a. Election of remedies
CONTRACT REMEDIES
i. P sues for damages First: (a) Must be intentional
rescission is NOT allowed misrepresentation
(a) The suit is considered 3. Defenses
an affirmannce of the K a. Unclean hands, Laches
ii. P sues for rescission First: b. NOT defenses
Damages ARE allowed i. Negligence of the P
iii. NOTE: P can sue for both ii. Statute of frauds will not
at the same time but must prevent reformation
elect the preferred remedy iii. Parol evidence
BEFORE judgment
b. Availability of Restitution
i. If a P who is entitled to
rescission has previously
rendered performance on
the K (performance
services, advance on
purchase price) she can
get compensated for it or
get the property back via
restitution
c. Legal rescission:
i. Equitable: here are my
grounds for rescission,
please tear up
ii. Legal: P does by own
action. Dont go to court. P
3
then sues for restitution.
1. Definition: changes written
agreement to conform w/ the
parties original understanding
a. Problem: written agreement
doesnt accurately reflect what
we agreed to.
2. 3 Step Analysis
a. Must have a valid contract
(meeting of the minds, mutual
assent)
b. Must have grounds for
reformation
i. Mistake
(a) Mutual: reformation
GRANTED
(b) Unilateral: reformation
DENIED
(i) Unless non-
mistaken party
actually knew of the
mistake
ii. Misrepresentation