CHAPTER 18: CONTRACT REMEDIES
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TOPICS COVERED IN CHAPTER 18:
CONTRACT REMEDIES
A. Monetary Damages.
B. Remedies in Equity.
C. Restitution.
D. Limitations on Remedies.
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MONETARY DAMAGES
 Monetary damages is the most
common judicial remedy for breach
of contract.
 Compensatory Damages.
• Loss of Value – value of promised
performance minus value of actual
performance. 
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MONETARY DAMAGES
 Compensatory Damages.
• Cost Avoided – loss or costs the injured
party avoids by not having to perform.
• Incidental Damages – arise directly out
of a breach.
• Consequential Damages – not arising
directly out of a breach but arising as a
foreseeable result of the breach.
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MONETARY DAMAGES
 Reliance Damages – contract damages
placing the injured party in as good a
position as she would have been in had
the contract not been made.
 Nominal Damages – a small sum
awarded where a contract has been
breached but the loss is negligible or
unproved.
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MONETARY DAMAGES
 Damages for Misrepresentation.
• Fraud. Benefit-of-the-Bargain, and
Out-of-Pocket measure of damages.
Plaintiff may also be entitled to punitive
or ‘bad faith’ damages.
• Nonfraudulent Misrepresentation.
Plaintiff may recover general damages
and consequential damages.
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MONETARY DAMAGES
 Punitive Damages – are generally not
recoverable for breach of contract.
 Liquidated Damages – reasonable
damages agreed to in advance by the
parties to a contract.
• ARROWHEAD SCHOOL DISTRICT NO. 75,
PARK COUNTY, MONTANA V. JAMES A. KLYAP,
JR. (2003).
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MONETARY DAMAGES
 Limitations on Damages.
• Foreseeability of Damages – potential
loss that the party now in default had
reason to know of when the contract
was made.
• HADLEY V. BAXENDALE (1854). 
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MONETARY DAMAGES
 Limitations on Damages.
• Certainty of Damages – damages are
not recoverable beyond an amount that
can be established with reasonable
certainty. 
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MONETARY DAMAGES
 Limitations on Damages.
• Mitigation of Damages – injured party
may not recover damages for loss he
could have avoided by reasonable effort.
• PARKER V. TWENTIETH CENTURY-FOX FILM
CORP. (1970).
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REMEDIES IN EQUITY
 Available only where there is no
adequate remedy at law.
 Types:
• Specific Performance – court decree
ordering breaching party to render
promised performance.
• REAL ESTATE ANALYTICS, LLC V. VALLAS
(2008).
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REMEDIES IN EQUITY
 Types:
• Injunctions – court order prohibiting a
party from doing a specific act.
• MADISON SQUARE GARDEN CORP., III V.
CARNERA (1931).
• Reformation – court order correcting a
written contract to conform with the
original intent of the contracting parties.
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RESTITUTION
 Restoration of injured party to
position she was in before the
contract was made.
 Party Injured by Breach – if other
party breaches the contract by
nonperformance or repudiation. 
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RESTITUTION
 Party in Default – for any benefit
conferred in excess of the loss caused by
the breach.
 Statute of Frauds – if a contract is
unenforceable because of the statute of
frauds, a party may recover the benefits
conferred on the other party in reliance
on the contract.
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RESTITUTION
 Voidable Contracts – a party who has
avoided a contract is entitled to
restitution for any benefit conferred
on the other party.
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LIMITATIONS ON REMEDIES
 Election of Remedies – if remedies
are not inconsistent, a party injured
by a breach of contract may seek
more than one. 
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LIMITATIONS ON REMEDIES
 Loss of Power of Avoidance – a party
with the power to avoid a contract
may lose that power by:
• Affirmance. MERRITT V. CRAIG (2000).
• Delaying unreasonably in exercising the
power of avoidance.
• Being subordinate to intervening rights
of 3rd parties.
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CONTRACT REMEDIES
Has the contract been
breached?
Yes
Are legal remedies adequate?
No
No
No Remedy
Equitable Remedies may
be available
Yes
Is there a provision for
No
reasonable liquidated damages?
Legal Remedies are
available
Yes
Recovery of liquidated damages
Compensatory
Damages
Reliance
Damages
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Restitution