Chapter 9
Remedies for breach of contract
Breach of k is a party’s failure to perform his or her
obligations under a k.
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A valid k that is breached by either party is
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still a valid k. So the court enforces a k.
(the court is providing a remedy
to the non-breaching party.)
Under CISG the court can impose two
types of remedies for breach of K: monetary damages
& specific performance.
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Monetary Damages: The money that the breaching
party pays to the non-breaching party for breach of k.
There are two main types of monetary damages expectation
damages and reliance damages.
Expectation damages: Monetary damages are made up of
two components: compensatory damages and consequential
damages.
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Compensatory damages (direct loss): The breaching party
compensates the non-breaching party for any loss suffered as a result of
the breach, such as: profit which the non-breaching party would have
earned from that K and any incidental expenses. (Art.74 of CISG)
☻-Study Question # 20
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Consequential damages:
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☻- Study Question # 21
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Remember that the court can award both compensatory and
consequential damages if necessary to make the non-breaching
party “whole”. Ex: Dina is sued by Neam.
☻-Study Question # 22
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The breaching party compensates the non-breaching party for any
indirect losses resulting from the breach which were reasonably
foreseeable by reasonable person at the time the K was formed.
The breaching party is liable for those damages in addition to
compensatory damages.
Sambo also had an obligation to minimize her damages resulting
from Saray’s breach.
The court will require the non-breaching party to take reasonable
steps to limit the amount of consequential damages. Because Art.77
of CISG, the non-breaching party has an obligation to try to
minimize the damages resulting from the other party’s breach.
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Reliance Damages ( direct loss): Occasionally, a court will
not be able to determine the amount of expectation damages
because they are too speculative.
Reliance damages are reimbursement for the costs that the
non-breaching party incurred before the breach in reliance on
the contractual obligations being fulfilled.
☻-Study Question#23
Specific Performance
In certain situations money alone may be insufficient to make
the non-breaching party whole. So the court can order the
breaching party to carry out its obligations under the K .
( See example page 76 )
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Summery
monetary damages
Remedies
specific performance
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Continued
Expectation damages
Monetary damages
Reliance damages
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Continued
Expectation damages = compensatory damages
+ consequential damages
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