Remedies Short Outline

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Remedies Short Outline
Contempt
 Federal courts have this power from 18 USC 401, all contempt must fit within the 3 categories provided
 Civil
o Generally seeks to coerce the bound party into compliance prospectively, as demonstrated by daily fines or
imprisonment  ends when trial is over
 When they choose to conform to the court’s directive, the sanctions cease
o Can afford compensation associated w/ the disobedience as well as coercing the DF into furnishing the
documents ordered by the court
o Appealable only when underlying case is appealable
o No right to jury trial bc they can let themselves out
o Coercive  may be incarcerated for 6 months w/o jury trial, encourages compliance for the benefit of the
prevailing party by designating daily fines or imprisonment if the opposing party fails to comply
 Imprisonment ends with compliance, fine accrues until compliance
 Limited to the period of time when coercion may yield its intended effect, must end when its clear
compliance will never be achieved
o Compensatory  awards a party monetary damages for injuries caused by the opposing party’s violation of
the court order designed to protect adjudicated interests D
 Damages before injunction = tort, damages after = compensatory civil contempt
 Must show:
 Losses were caused by the contumacious behavior
 Prove resulting compensatory damages w/ reasonable certainty
 Attorneys’ fees included as a proper element of recovery (limited to pursuit of the contempt claim)
o Amount determined by considering the character and magnitude of the harm threatened by continued
contumacy, and the probably effectiveness of any suggested sanctions in bringing about the result desired
 Criminal
o Primarily intended to ensure proper respect for the court, need not arise out of a criminal proceeding
o Judges issuing criminal contempt orders in federal court must comply with FRCP 42, which sets forth certain
notice requirements, jury trial rights, and outlines the responsibilities of judges which are applicable to
summary orders
o Separate offense  appealable immediately and survives
o Gets normal criminal protections, ex. privilege against self-incrimination, right to jury trial, beyond a
reasonable doubt, right to present defense
o Reaches only to those parties bound by underlying court order under FRCP 65(d)(2)
o Direct
 (Summary) operates to maintain order in the courtroom, ex. punishing disruptive behavior
 Reviewable for abuse of discretion
 Under 18 USC § 401(1) a judge has discretion to punish by fine, imprisonment or both, the
misbehavior of any person in the court’s presence which obstructs administration of justice
 FR Crim. Pro. 42(b) requires that in federal court the conduct must be committed in the actual
presence of the court and be seen by the presiding judge
 Order must recite relevant facts and be signed and filed w/ clerk
o Indirect
 (Constructive) it concerns behavior that occurs outside the direct presence of the judge  punishes
conduct that constitutes defiance toward the court through disobedience of a lawful order
 Constitutional protections only apply to this type
 Requirements:
 (1) a valid order issued by a court of competent jurisdiction enjoining the party to act or
refrain from acting in a certain manner
 (2) notice by the party of the specific terms of the order
 (3) the ability of the party to comply w/ the order, AND
 (4) intentional or willful noncompliance w/ the order by the party w/o justifiable excuse
 A party who lacks ability to pay will not be held liable in crim. Contempt for failure to make
scheduled child payments
Injunctions
 All are preventative in a sense
 The legal ruling on which a trial court’s entry of an injunction is issued is reviewed de novo, but the ultimate decision
whether to issue a preliminary injunction is reviewed for abuse of discretion.
 In determining whether to order injunctive relief, courts typically consider 5 factors:
o (1) Adequacy of a remedy at law
 Looks to whether other modes of relief will be sufficient to compensate the PL
 Ex. necessity of multiple lawsuits, damages = too speculative
o (2) Irreparable harm to the PL
 Defined by some courts to mean great harm coupled w/ no adequate remedy at law
 Describes the quality or severity of the harm, must be great in nature and not trivial
 Ex. where a party is threatened w/ a loss of business if the loss would destroy the business,
loss of good prospective will
o (3) Relative hardships
 Balance what is protected by the potential injunction against the hardship of complying
 Looked at when determining scope as well
o (4) Practicality, AND
 Ease of enforcement –looked at for scope as well
o (5) Public Interest
 Can’t create public interest, found in precedent, legislation, and the Constitution—scope as well
 Ex. public safety, health, public economic interests
 Interlocutory
o Court must state conclusions of law and fact that constitutes the grounds for the action
o FRCP 65(c) security (bond or guarantee) must be provided by the movant before a court issues a TRO or
preliminary inj.
 Its reversible error to refuse the bond unless there is no risk of monetary loss
 Court has discretion is setting the amount, enjoined party may request it be increased
 Generally the ceiling on the measure of damages recoverable if the DF prevails, unless the
bond was “open” or w/o limitation
 Presumption favors some recover of damages against the bond, but DF bears burden to
prove actual loss (measurable harms, not including distress/humiliation) suffered from the
wrongfully issued inj. and must be proven w/ specificity
o Preliminary
 4 Prong Traditional Test
 (1) A substantial likelihood that the movant will ultimately prevail on the merits
 (2) A showing that the movant will suffer irreparable harm unless the injunction is issued
 (3) Proof that the threatened injury to the movant outweighs whatever damage the
proposed injunction may cause the opposing party, AND
 (4) a showing that the issuance of an injunction would not be adverse to the public interest
 Sliding Scale Test
 Sliding scale regarding how serious the harm must be in relation to the likelihood of success
on the merits when deciding whether to grant an injunction  the more serious the harm,
the lower likelihood of success on the merits must be to warrant an injunction
 Needs to show that irreparable harm is LIKELY at least
 May not issue w/o notice to the opposing party notice and opportunity to be heard
o Temporary Restraining Order
 Same tests as Preliminary, different procedural restraints
 Stop gap measure for a truly urgent situation to preserve the status quo long enough for a prelim.
Inj. Hearing
 After the hearing, the TRO is either dissolved or replaced with a prelim. Inj.
 May be issued w/o notice to opposing party under exceptional circumstances (showing that
immediate and irreparable harm will result before the opposing party could be notified and heard)
 Specific facts in an affidavit or verified complaint clearly show that immediate and
irreparable injury will result before the adverse party can be heard, AND
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Movants’ attorney certifies in writing the efforts she made to give notice and the reasons
why notice shouldn’t be required
Limited duration  14 days, with another 14 day extension for good cause or if the other party
consents to the extension
 When the time limits are violated  the TRO converts into a prelim. Injun. For purposes of
appeal and then can be reversed based on lack of sufficient hearing to support the prelim.
Permanent
o After trial, the movant will still need to show irreparable harm esp. when they have a prelim. Inj. which
prevents the harm
o Preventative
 Ordering the DF not to do something or to do something, prevents a future harm
o Structural
 Ordering changes in the policy of a DF entity, such as desegregating schools
o Prophylactic
 Ordering a DF to take preventative steps to safeguard against future violations, such as move out of
a city to avoid contacting PL
o Restorative
 Ordering the DF to do something that restores the PL for past wrongs, not just guarding against
dangers, such as redoing a corrupt election
Specific Performance
o Equitable discretionary remedy issued to enforce K rights and duties
o Requires a showing that the claimants rights and expectations pursuant to the K necessitates equitable
intervention  if denied, the non-breaching party still can seek any available legal remedies
o Factors Courts consider when determining whether to grant SP:
 (1) the inadequacy of a legal remedy
 Must overcome the traditional K view of damages as norm (theory of efficient breach of k)
 Ex. where breaching party is insolvent, problems with valuation, inability to effect cover
 (2) the likelihood of future performance by the party seeking enforcement of the K
 Ready Willing & Able
 (3) the ability of the breaching to render performance
 Mutuality
 (4) the balance of the interests and relative hardships of the K parties, AND
 (5) potential difficulties in the supervision or enforcement of the order
 whether court will incur significant burden or time and resources
o If the K terms are vague and not capable of interpretation  court will deny SP
o Court may deny SP in situations involving mistake, grossly disproportionate consideration, duress, etc.
o Courts will not order SP for personal services
 Employers are rarely required to accept personal services unless subject to a statute
 Court may grant a negative injunction to prohibit the services being rendered elsewhere
o A covenant not to compete must be reasonable in terms of:
 (1) Geographic Scope
 (2) Scope of the Work, AND
 (3) Duration in order to justify enforcement through equity
Specific Performance Under UCC
o UCC § 2-716(1) provides that SP may be appropriate when goods are “unique or in other proper
circumstances”  uniqueness = no commercially reasonable substitute is readily available w/o undue
expense, difficulty or delay  then the buyer does not have an adequate remedy at law
o The buyer has the burden of demonstrating the inability to obtain a reasonable substitute w/o unnecessary
burden, expense or delay
 Whether buyer can enter the market and obtain cover to replace the K goods?
o “other proper circumstances”: inability to cover may justify SP, ex. scare material (importance of goods to
business can be influential in granting SP)
Limitations on Injunctions
o Statutory Limits on Discretion
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Courts have discretion to issue injunctions unless a statute specifically and clearly reduces or
eliminates such discretion –if a statute says no discretion, the courts don’t have discretion WHETHER
to issue an injunction, but still have discretion in FASHIONING the injunction to accomplish the
statutes goals and to accommodate the interests of the parties
o Enjoining Speech
 Heavy presumption against the constitutional validity of any prior restraint on speech
 Money damages usually deemed inadequate due to importance
 In the exceptional case in which an injunction will be entered against speech, the injunction should
be narrowly tailored to withstand constitutional scrutiny and to satisfy due process requirements in
order to be enforceable w/ contempt sanctions
 Limitations can be placed on time, place, & manner when there is a compelling gov. interest
 Constitutional claims involve rights that could require equitable intervention
o Enjoining Litigation
 Injunctions precluding the filing of lawsuits may be issued to abate the filing of the frivolous,
duplicative, or vexatious lawsuits—such injunctions generally will not be entered unless there has
been a pattern of improperly filed lawsuits
 Before the injunction, the court will typically provide the party an opportunity to be heard
and the court will explain what is necessary to file proper claims in the future
o Enjoining Nuisances
 A court may enjoin a public nuisance that is occurring or immediately threatened nuisance to
prevent it from arising
 Environmental injury, can seldom be adequately remedied by money damages and is often
permanent or a long duration—i.e. irreparable
 Public may not be brought by individuals unless their harm is different from the public harm
 Private nuisance may be brought my individuals
o Enjoining Crimes
 Courts will generally not entertain declaratory judgment actions to challenge the legality of criminal
statutes  they should assert that in their defense
 Unless important constitutional or property rights that cannot be afforded complete relief in
the absence of an injunction are at issue
Defenses
o Laches
 Bars a suitor in equity who has not acted promptly in bringing the action
 DF must prove:
 (1) Unreasonable delay by the claimant, AND
o Flexible inquiry, highly fact intensive
o Will excuse delay if claimant lacked material info relevant to the claim and the
exercise of reasonable diligence couldn’t have obtained the facts in a timely manner
 (2) Prejudice to the party asserting the defense
 Courts consider not just the length of the time the claimant waited to bring the claim, but also
whether there are legitimate reasons for the delay such as a tolling agreement between the parties,
incapacity, or infancy of the claimant, ongoing settlement negotiations, or pending related litigation.
 2 Principle types of prejudice:
 Loss of evidence or witnesses needed to support a defense, OR
 The expenditure of resources in reliance upon the status quo or conveyance of the property
at issue to a bona fide purchaser
o Equitable Estoppel
 Party claiming must demonstrate:
 The other party made a statement or engaged in conduct that induced the other party to act
upon the statement or conduct
 The party claiming estoppel reasonably relied upon the statement or conduct in good faith
to his or her detriment, AND
 The party claiming estoppel would be prejudiced if the other person were permitted to
assert a right inconsistent w/ the prior statement or conduct
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May arise due to silence if there is a duty to speak and the party on whom the duty rests has an
opportunity to speak, knowing the circumstances, but remains silent
 Not dependent on fraud or illegality
Unclean Hands
 Bars PLs whose claims are in some way morally tainted even if they are legally sound
 PL behaved inequitably w/ respect to the rights it is asserting in the case before the court
 Uncleanliness must be significant, but doesn’t need to rise to level of fraud or illegality  must be
related to the claim at issue, not generally
Unconscionability
 If the judge finds, as a matter of law, that a K’s terms are so one-sided as to be oppressive, then it
can hold the entire K unenforceable, remove the objectionable provision, or limit the objectionable
provision’s effect  requires both Procedural and Substantive Unconscionability
 Substantive: focuses on whether the terms are unreasonably favorable to one party
 Considers industry standards, risk of default, the objective difference in consideration
exchanged, trade usage, commercial reasonableness of the terms
 Procedural: focuses on manner of K formation
 Inquiry considers the relative sophistication and bargaining power of the parties and
whether one party lacked a meaningful choice when entering the K
In Pari Delicto
 Legal defense
 “in equal fault”—applies when both parties have engaged in some serious misconduct related to the
claims asserted
 Each party bears substantially equal responsibility and culpability of both parties arose out of the
same illegal or fraudulent act
Election of Remedies
 The election of remedies doctrine is largely dead under the Rest. and UCC because the remnants of
the rule are used only to prevent a party from receiving a double recovery. In jurisdictions that still
apply the doctrine, a PL can only elect one remedy if multiple, inconsistent remedies are available.
Once the election is made, the PL is precluded from recovering under a different remedy.
Contract Remedies
 Damages
o Need to be proven w/ reasonable certainty
o General measure: all damages that accrue naturally from the breach so that the non-breaching party is put in
as good a pecuniary position as he would have been if the K had been performed
o Can get either expectation, reliance or restitution, but not more than one
o If the performance is defective, rather than incomplete, it may not be possible to prove loss in value to the
injured party w/ reasonable certainty  they then can usually recover damages based on the cost to remedy
the defects
o Expectation Damages
 Measured by:
 (1) The loss in value to the non-breaching party of the other party’s performance caused by
its failure or deficiency, PLUS
 (2) any other loss, including incidental or consequential loss, caused by the breach, LESS
 (3) any cost of other loss that he avoided by not having to perform
o Reliance Damages
 Non-breaching party seek damages for expenses incurred in reliance upon performance of K duties
 2nd Option ex,, if the expectation damages can’t be proven with reasonable certainty
o Restitutionary
 Restitutionary interest that is embodied w/in an express K  this interest serves the same basic
function as restoring back to the injured party some benefit that should not be retained by the other
K party
 Ex. K to buy 1,000 widgets for $10,000, seller delivers 800 and buyer has to cover the 200
remaining  Restitution would get you back the $2,000 overpayment for the non-delivered
goods
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Damages under a theory of restitution also can provide an appropriate measure of relief where the
injured party’s ability to recover is clouded or otherwise not feasible
 objective is not the
enforcement of contracts through the protection of an injured party’s expectation or reliance
interests, but is instead rooted in common notions of equity through the protection of the injured
restitution interests
 Breaching party must disgorge the benefits received to the party who conferred them —>
governed by the principles of equity  A party may elect the remedy of restitution but its decision to do so is at the exclusion of the
other compensatory remedies.
 PL must prove:
 (1) the DF received a benefit
 (2) the DF received the benefit at the expense of the PL
 (3) the DF was aware of the benefit, AND
 (4) it would be inequitable to allow the DF to retain the benefit w/o paying the PL for it
 Two Forms
 Quantum Meruit (see below)
 Implied in Law K (see below)
o General  Actually Received
 Flow directly and immediately as a natural consequence of the breach presumes such damages
are foreseen/contemplated by the DF
o Special  Consequential and Incidental
 Only expectation
 Breaching parties are only liable where the evidence shows that they should have reasonably
foreseen the kind of harm resulting from their non-performance at the time of entering the
agreement
 Consequential = lost profits
 Incidental = cost of storage, transport etc. LOSS OF USE
o Liquidated
 Parties decide to specify the amount of damages that would be payable to the non-breaching party
in the event of a material breach of K
 If the liquidated damages are viewed as an attempt to compel performance, then they are viewed as
a penalty and are unenforceable
 To determine the validity of a liquidated damages provision, look at whether, at the time of
contracting:
 (1) the damages resulting from the breach would be difficult to determine or prove, AND
 (2) the stipulated amount had a reasonable relationship to the potential damages if a breach
occurred (objective, does not have to be exact)
 If the provision is enforceable, then the amount of its loss that the non-breaching party was able to
reduce through its mitigation efforts is not deducted from its damages award
 UCC: adds the factor of “inconvenience or on-feasibility”
 If invalid  can seek actual compensatory damages, but can’t get both
o Pre-Judgment Interest
 May be awarded as an additional item of compensatory damages where contracted for
 Intended to compensate for the loss of use of the money from when payment was due until the date
of judgment
 Requirements:
 (1) the date the money was due must be definite, AND
 (2) the amount of the claim must be readily ascertainable at that time
 Discretionary  requires a showing of reasonable certainty for both factors
Construction Contracts/Conforming w/ Economic Waste Rule
o Come into terms when there is an incomplete or defective building (construction k)
o Cost Rule
 Would allow the non-breaching party to recover the damages to complete or remedy the defective
condition to conform to the K
o Value Rule
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Measure the damages by the diminution in value of the performance received compared to the
value promised
o Most courts will award the diminution in value where the cost of repairs would be clearly disproportionate to
the value to the injured party in correcting the defect
New Business Rule
o Hard to prove lost profits for breach of K with new businesses, due to lack of sufficient operating history
makes profits too speculative
o Growing trend is to focus on whether the damages can be established w/ sufficient evidence rather than
preclude recovery automatically
 Before and After Theory: PL introduces evidence of their track record of profits prior to and following
the breach
 Yardstick Test: considers evidence of comparable business operations
Sale of Goods K Damages
 Buyer’s Remedies
o Rescission and Restitution
o Specific Performance
o Cover
 Buyer may enter the market and make a reasonable purchase of substitute goods
 Measure = difference between the cost to cover and the K price PLUS incidental or
consequential damages, LESS expenses saved
 Buyer must:
 (1) act in good faith
 (2) w/o unreasonable delay, AND
 (3) make a reasonable purchase of substitute goods
 Doesn’t have to exactly replicate the terms of the K  acquired goods must be “reasonable
substitutes”, don’t have to be identical
 Must act in a commercially reasonable manner
o Damages for Non-Delivery/Repudiation of Goods
 When a seller breaches by repudiating/failing to deliver goods, OR where a buyer
rightfully/justifiably revokes acceptance of a seller’s non-conforming good
 Measure = difference between the market price at the time when the buyer learned of the
breach and the K price PLUS incidental and consequential damages, LESS expenses saved
 No duty or obligation to cover
o Consequential Damages
 Losses that are reasonably foreseeable by the breaching party, including items like lost profits
 Must show:
 (1) that a loss resulted from the failure of the seller to perform general or particular
requirements of the buyer,
 (2) that the seller had reason to know of those requirements and needs at the time of the
contracting, AND
o Can be satisfied either objectively or subjectively
 (3) the buyer could not have prevented the losses by cover or otherwise
 Buyer must only show that the seller reasonably contemplated that some lost profits would be
sustained in the event of breach, not the exact amount
 Can recover as consequential damages: loss of primary profits, loss of secondary profits, and loss of
goodwill damages (prospective future profits)
o Incidental Damages
 Damages incurred as a result of the breach
 Loss of use measured by the reasonable rental value of the goods at the time of the loss
 Failure to rent a substitute doesn’t preclude a buyer from recovering loss of use damages
o Damages from Acceptance of Non-Conforming Goods
 A buyer that accepts non-conforming goods and give proper notice of a claim to the seller
 Measure = actual difference in value between the goods as promised and the goods as
received
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 May include: breach of warranties and failure of a seller to perform under the contract
 Buyer is authorized to recover for losses in any reasonable manner
 Presumed to be foreseeable
Seller’s Remedies
o Each of the basic damages remedies are complemented by the entitlement to incidental damages to
reimburse the seller for expenses reasonably incurred as a result of the breach
o Any expenses saved as a result of the buyer’s breach are subtracted from the total
o Not entitled to consequential damages
o May recover for lost profits and reasonable overhead if they ordinary measure of damages is inadequate to
put the seller in as good a position as for performance
o Resale Damages (UCC § 2-715)
 A seller may enter the market and effect a resale of the K goods
 Measure = difference in the K price LESS the resale price, PLUS incidental damages, LESS
expenses saved
 Resale must:
 Be conducted in good faith
 In a commercially reasonable manner, either at a public or private sale
 When proof of relevant market prices at the time is lacking, courts have flexibility in using a
reasonable substitute to make the necessary calculations
 The seller is not accountable for any profits made on the resale
 If the seller chooses not to resell the goods
 Measure = K price MINUS the market price at the time and place for tender, PLUS incidental
damages, LESS expenses saved
 Seller is under no obligation to resell goods following a breach
o Damages for Non-Acceptance/Repudiation of Goods (UCC § 2-708(1))
 Where a buyer breaches by repudiating/failing to accept goods
 Measure = difference between the market price at the time and place for tender and the
unpaid K price, PLUS incidental damages, LESS expenses saved
 UCC does not require an election of remedies by the non-breaching party, so the seller may choose
to enter the market and resell or may retain the goods following the rejection/repudiation
 Seller must provide probative evidence of the market w/ a reasonable degree of certainty
o Lost Profits (UCC § 2-708(2)
 Sometimes damages available through § 2-708 might be inadequate to compensate for lost profits
 A seller can recover lost profits even if the seller retains the completed good if no market exists in
which to sell the goods (2 situations below & when they possess goods, but market is oversupplied)
 If the measure of damages for resale-K price differential is inadequate to put the seller in as good a
position as performance would have done then:
 Measure = lost gross profit (including reasonable overhead) which the seller would have
made from full performance by the buyer, PLUS incidental damages, PLUS reasonable costs
incurred (reliance expenses), LESS resale payments
 Applies in 3 Situations:
 Seller does not possess the goods
 Seller has the goods, but they are unfinished,
 Lost Volume Seller
o (1) the person who bought the resold product/services would have been solicited by
the seller had there been no breach or resale
o (2) the solicitation would have been successful, AND
o (3) the seller had the requisite capacity to perform to perform both Ks
o Action on the Price (UCC § 2-709)
 When the buyer fails to pay when the amount is due, the seller may recover:
 Measure = Incidental damages PLUS the price of goods accepted/conforming goods w/in a
commercially reasonable time after risk of loss has passed to the buyer, PLUS the price of
the goods identified to the K if the seller is unable to resale them
 Situations in which its utilized:
 (1) where the buyer has accepted the goods,
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(2) conforming goods have been lost or destroyed after risk of loss has passed to the buyer,
OR
 (3) goods are identified to the K and the resale is impracticable (no ready market exists for
commercially reasonably sale, ex. specially manufactured goods)
Legal remedy that provides a damages award
A seller who isn’t entitled to the price under this section can be awarded damages under §2-708
Land Sale K
o Either damages or specific performance (non-breaching party)
o When the buyer defaults on a real estate K w/o lawful excuse, he cannot recover his/her down payment,
especially if its less than 10% of purchase price  forfeiture provisions are generally enforced unless disparity
in bargaining power, duress, fraud, illegality or mutual mistake)
o Where the seller can’t deliver full title:
 Minor Defect  can still order SP w/ an abatement or adjustment to the purchase price
 Major Defect  court may not order a conveyance that’s substantially different from original K
o Non-Breaching Vendee
 Expectancy Interest
 Get an award for the benefit of the bargain for the vendor’s breach of K to convey title
o Measure = difference between the K price and the fair market value of the land on
the date of the breach, PLUS expenses incurred and, LESS benefits
received/expenses saved
 Could get lost profits
 Must prove w/ reasonable certainty that such losses were reasonably foreseeable by the
seller at the time of the K
 Specific Performance
 When the seller breaches, compensatory damages are usually limited to:
 (1) the return of the money paid on the purchase price w/ interest thereon, PLUS
 (2) the difference between the market prices of the property at the time of the breach and
the K price
o Non-Breaching Vendor
 May seek recovery of the purchase price, as a corollary remedy to SP
 Could get from liquidated damages clause or earnest money provision
 Upheld if meets standard of a good faith, reasonable pre-estimate of actual compensatory
damages
 If invalidated, the non-breaching party may still seek compensatory damages for the loss of
benefit of the bargain (expectancy)
o Measure: difference in market price at the time of the breach and the K price
 Claimant bears burden of proving damages w/ reasonable certainty
Equitable Remedies
o Rescission
 Parties to a K w/ performance remaining on both sides may mutually agree to discharge/rescind
their remaining obligations
 A party may rescind at law by giving notice of the intend to rescind, offer to give restitution of
benefits received, and demand restoration of benefits conferred
 If they comply, restitution is accomplished by agreement
 If not, the K is deemed rescinded but recovery will depend on appropriate relief through
maintaining an action at law
 Grounds may include:
o Mistake
o Fraud
o Duress
o Unconscionability
o Misrepresentation
 Courts will consider the materiality of the grounds for rescission and will use it in instances
where the basic assumptions of the K are affected
 A claimant may seek rescission in equity in order to recover specific or unique property
o
 The property could be conveyed through a restitutionary remedy, ex. constructive trust
Reformation
 Equitable remedy used to conform an agreement to reflect the true nature intentions of the parties
 Does not lead to termination of the K  rectifies some inaccuracy in the written terms to make it
correspond to the original understanding of the parties
 Ex. where mutual mistake of a material fact occurs w. respect to a description or quantity of
the subject matter of the K
 Court can correct errors that occurred in the integration of the K to conform to the parties
reasonably expectations
Tort Damages
 Personal Property
o Finding a of fact and legal consequences follow
o Conversion generally results in the owner receiving the item’s fair market value on the date of conversion
o For stolen commodities, the PL is awarded the greater of:
 The market value at the time of conversion, OR
 The highest market value between the date on which the PL learns of the conversion and the
expiration of a reasonable time period thereafter
o Destroyed or Lost Personal Property
 Destroyed = either through total destruction or through injury whose cost of repaid exceeds the
value of the property
 Usual Measure = fair market value immediately before its destruction or loss MINUS any
remaining value
o Fair market value = the price a willing buyer and seller would find in an arm’s length
transaction w/ each party fully performed
 When the destroyed/lost property fluctuates in value:
 New York Rule Measurement (Majority) = the greater of either the fair market value at the
time of conversion OR the highest fair market value between the time the PL learns of the
conversion and the expiration of some reasonable time thereafter
o Reasonable Time = time necessary for a reasonable investor to purchase
replacement property
 When the destroyed/lost property lacks fair market value:
 Most courts allow the owner to recover the actual value of the property to the owner
 Objective measure, does not include sentimental value
 Limited to ACTUAL VALUE:
o Ex. Replacement Cost LESS some amount to account for age and condition at the
time of its destruction
 Some Juirs. Exception to Prohibiting Sentimental Value:
o Items whose primarily vale is generally recognizable as sentimental, ex. wedding
rings  less chance of false claims
 When value to owner exceeds market value:
 Property owner will be allowed to recover the actual value to the owner
 Pets:
 Most jurisdictions limit recovery to the FMV or the actual value at the pet’s death
 Consumables:
 Allow recovery of actual value of clothes and household goods that are personal
consumables
 Most juris. Permit a “value to the owner” measure for these items
o Factors:
 Replacement cost, original cost, quality, and condition
 For a second hand store, the measurement of fair market value would be appropriate
o Injured Personal Property
 Injured = property can be repaired at a cost less than its value
 Measure = if that cost is economically feasible = cost of repairs
o Most juris. Allow this as long as the cost of the repair does not exceed the pre-tort
fair market value
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Measure = if that cost exceeds the pre-injury market value = pre-injury market value
o Some juris. Provide that repairs are infeasible if the cost to repair exceeds the
diminution in value= (value before MINUS value after the injury)
 Some courts recognize exception = where the item has “special” or “personal” value to the owner
 Ex. heirloom injured, even if the cost to restore the heirloom to its pre-tort condition may
exceed the diminution in value, a court may allow damages for repair to accommodate the
interests of the owner
o Loss of Use
 Majority permit damages for the loss of use of the property while it is being repaired  current
trend is to permit a PL to recover loss of use when destroyed
 Measure = loss of use for a reasonable period of time in which to replace the destroyed
property
Real Property Damages
o Restoration Costs
 If an injury to real property cannot be repaired, limited to the diminution in value of the land:
 Measure: difference between the fair market value of the property immediately before the
injury and its fair market value immediately after
 If an injury to real property can be repaired:
 Measure = reasonable cost of restoration or repair of the land to its former condition
 Some courts allow recovery of restoration costs so long as the restoration costs do not exceed the
pre-tort value of the property
 Others limit recovery to the lesser of cost to repair or diminution in market value caused by the
damage
 For harm to real property is reparable, courts generally use two competing measurements:
 Cost to Restore
 Diminution in Fair Market Value
 Rest. 2nd of Torts § 929
 Restoration cost should be ordinarily allowable as the proper measure of damages unless its
“disproportionate” to the diminution in value
 Even if the restoration costs exceed the diminution in value, the landowner should be
entitled to recover the reasonable restoration costs if the landowner has a reason personal
to the owner for making the repairs
o Some courts use a fair rental value for the period of the injury to compensate for temporary harms for the
loss of use of the land
 Many courts limit recovery to not exceed the depreciated value of the land
o If the wrongful act adversely affected the value or use of the entire parcel, it’s appropriate to compute
damages on the basis of the total acreage and not just the part damaged
 Where one part has permanent damage and the other part has temporary damage, its proper to
allow recovery for both items, provided no double recovery
o Permanent v. Temporary
 Statute of limitations begins to run, unless tolled by equitable circumstances, from the date of the
initial interference
 If temporary  statute of limitations runs from each invasion
 If permanent  first invasion beings the statute running
 Injunctive Relief?
 Permanent  courts will not issue a preventative injunction , bc already compensated for
future harms in the diminution in value  injunction would overcompensate
 Temporary  potentially, the damages given to compensate for the past interference, and
injunction would prohibit future conduct  no overlap
o Damages to Structures on Land
 For the destruction of an improvement valuable separately from the land:
 Measure = value at the time of destruction, LESS salvage value
 For the injuring of an improvement valuable separately from the land:
 Measure: Cost of Repair and Loss of Use
o
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Some courts limit the cost of repairs to not exceed the diminution in value of the
improvements (capped) if it has a separate value, or to the diminution in the value
of the entire land if the improvement has no separate value
Damage to Vegetation
 Injury to Growing Annual Crops:
 Measure = Projected commercial market value of the crop at maturity, LESS costs of
harvesting and transportation that would otherwise be incurred by the owner
 Injury to Land Prepared for Planting:
 Measure = Cost of preparation, PLUS rental value for the season
 Injury to Trees w/ Commercial Value:
 Measure = Fair Market Value at the time of destruction
 Sometimes timber is treated differently by statute
 Injury to Trees/Vegetation w/ no value severable from the land:
 Viewed as injury to the land
 Measure: Cost to repair only if the cost to repair does not exceed the diminished value of
the property as a whole
o If the injured property has a special purpose to the land, ex. aesthetic value, could
also recover reasonable repair costs in excess of the diminution in value
o Removal of Natural Resources
 When DF has acted in good faith and removed the resources under a mistaken belief that she has the
legal right to do so:
 Measure = Royalty
o Royalty = reasonable value the PL would have received for leasing the mineral rights
to a third party
 When DF was negligent:
 Measure = Market value LESS cost of removal
 When DF acts in bad faith/egregious:
 Measure = Market value of the resources w/o deduction for extraction costs
Personal Injury Damages
o May include recovery for both past and future losses  need not be calculated w/ mathematical certainty
o Wide latitude of discretion is left to the jury
o Award is upheld unless, determined to be so excessive as to indicate bias, passion or prejudice influenced the
jury
o Can be reduced by failure to properly mitigate by taking reasonable steps
o Special Damages – must be pleaded and proved w/ particularity
 Future Special should be discounted to present value, taking into account the projected effects of
investment and inflation
o General Damages – may be determined by the trier of fact based on their own experience and considering
the nature of the injuries
o Lost Earnings
 Injured PL entitled to compensation for wages lost from a specific job for a period of time in which
the PL is unable to work bc of the injuries and envision that the PL will be able to return to the job
 Measure: Compensation while unable to work
 Can recover for the period of time she has been unable to work from the point of injury until trial
 Future Lost Wages  If PL will not be able to work until some point after trial
o Impaired Future Earning Capacity
 Compensates a PL for a narrowing of the range of her economic opportunities as a result of the
injuries (loss of marketability)
 Can recover even if she does not have a job at the time of the injury
 Can recover even if she is able to return to the job she held at the time of injury if she can
demonstrate that her injuries preclude her from other employment opportunities, ex. promotion
 Permanent Injuries:
 Measure: the time period of the injured party’s work life expectancy
o Takes into account individualized factors, ex. skills, training, and industry factors and
opportunities
o
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Pain and Suffering (general)
 Encompasses many harms, including physical pain, mental suffering, depression, anxiety and loss of
enjoyment of life
 PL must present evidence to support a claim for pain and suffering,  DF has opportunity to rebut
the PL’s evidence and introduce their own evidence
 Some jurisdictions place limits of the TYPES of arguments you can make
 Ex. can’t suggest lump sum, can’t/can suggest a per diem amount
 The jury must award compensation that is fair and reasonable in light of the evidence and typically
will make such judgment based on the nature and extent of the physical injuries
 Judge can review the award and remit or set aside the verdict if it’s too excessive that it shocks the
judicial conscience
 Many jurisdictions have caps
o Medical Expenses (Special)
 May recover for those already incurred and for future care and services
 Measure = reasonable value of any medical care required to treat her injuries
 Care received by the time of trial:
 Measure: reasonable value of that care, provided it was fair and reasonably necessary to
treat her injuries
 Insurance Write offs?
 Some courts have precluded DF from introducing evidence of insurance write offs and
permitted the PL to recover for the full amount billed for past medical expenses
 Some courts have limited PL’s recovery to the amount actually paid for services
 Some courts have middle ground approach  allow PL to introduce amount billed into
evidence while DF can introduce the amount paid, and give jury discretion to set the
reasonable value
 Reasonable Value Future Care
 PL must establish w/ reasonable certainty that she will need the care  means “more likely
than not”
 PL must establish w/ reasonable certainty the cost of that care
 The future medical expenses will be measured according to the injured party’s projected life
expectancy
 Must be discounted to present value
o Permanent Injuries, Disfigurement, or Lasting Destruction/Impairment of Health and Physical Functions
o Loss of Consortium
 Derivative claim brought by souse or other family members
 Based on the claimant’s emotional suffering as a result of the injured PL’s physical injuries
 Can’t be duplicative w/ other elements of the injured party’s recovery, and does not include
compensation for economic disadvantages/pecuniary losses
o Prejudgment Interest
Wrongful Death (specific group of beneficiaries)
o Can get loss of consortium, loss of financial support, medical and burial expenses for the death
o Pecuniary loss seeks to replace the financial support that the decedent would have otherwise given to their
family
 Measure = takes into consideration the decedent’s age, occupation, earning capacity, health habits,
and probably duration of their life w/o tort
o Any defenses that would have been available to the tortfeasor against the victim are preserved and may be
asserted in the wrongful death action (ex. statute of limitations)
o This right of action is predicated on the continued viability of rights which were personal to the deceased had
he lived  conditioned upon the existence of claims otherwise possessed by the decedent
Survival Claim (decedent’s estate)
o Mental and physical pain and anguish of the decedent experienced prior to death would be typically
recoverable
o Lost wages between the time of injury and death
o Medical expenses incurred between injury and death
o Subject to collection by creditors and taxes
Adjustments to Damages
 Present Value and Inflation
o Future losses are usually awarded in lump sum, ex. lost earnings
 First step: estimating the projected lost stream of income over the work life expectancy of the
injured party
 Usually measured after by tax dollars, and the discount rate represents the after tax rate of
return to the injured worker
 Second step: may involve adjusting the lump sum total by taking into account the impact of future
inflation and discounting the award to present value
o Most courts recognize that some reduction should be made to take into account the earning power of
investing money
o Discount rate should be based on the interest rate available on the “best and safest investments” which are
often interpreted as federal gov. issued securities
 Goal = approximate the level of earnings that the money could earn through hypothetical
investments that are relatively risk free
o Parties may opt to use installment method via private agreement, “structured settlement”
 Prejudgment Interest
o Courts may award interest as an element of compensatory damages based upon statute, K, or equitable
discretion
o Compensates the prevailing party for the loss of use of the money that will later be awarded at judgment
o Focuses on the period from accrual of the claim until the date of the judgment
o To recover prejudgment interest, claimant must show:
 (1) the date the claim arose and the amount due must be definite, AND
 (2) the amount of the claim must be readily ascertainable at the time the injury occurred
o Not used in personal injury cases bc amount depends on jury, except medical expenses
 Nor future losses, punitive damages
o Interest rate lies w/in discretion of the court  use various market mechanisms to determine the rate
 Ex. high grade gov. fixed income bond, US Treasury Bills
 Post-Judgment Interest
o State and Federal statutes uniformly provide for the payment of post-judgment interest to accrue on the
damages awarded until paid
Limitations on Compensatory Damages
 Foreseeability
o Limitation on all compensatory damages, both in K and tort
o Limitation on entitlement and measurement
o In Contract
 Damages must relate to what fairly and reasonably would arise naturally, either based on the K itself
or what the parties reasonably contemplated at the time of K formation
 UCC limits liability for losses which were not reasonably foreseeable by the breaching party at the
time of the K
 Inquiry: what knowledge or understanding the breaching party reasonably SHOULD be charged w/ at
the time of the K formation (objective, look at nature and purpose of K and reasonable, justifiable
expectations of the parties)
 General damages presume foreseeability
 Special/Consequential Damages  Claimant must show:
 The breaching party SHOULD HAVE contemplated or foreseen that the failure in
performance caused THE TYPE of damages
 UCC § 2-715(2)  consequential damages based upon whether the seller had “reason to
know” of general or particular requirements of the buyer
o In Tort
 Objective Inquiry: what a reasonable person in the tortfeasors position should have
realized/reasonably anticipated about the potential consequences of their actions
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Whether their subsequent actions or inactions would reasonably cause the category or TYPE
of injuries which ensued
 Doesn’t require anticipation of the exact manner, means or extent of the harm
 Thin Skulled/Egg Shell PL Rule: tortfeasor is responsible for severe consequences to a particularly
frail/susceptible person even if normal person would not have experienced the same degree of harm
o Limit damages for remote injuries
Certainty
o Limitation on both entitlement and measurement  must be proven w/ reasonable certainty
 Satisfied where a rational basis exists for computation
o Injured party bears burden of demonstrating that all claimed damages are caused by and traceable to the
tort or K breach
o The compensatory damages must satisfy the objective fair compensation rather than punishment
o Latitude given w/ respect to certainty to certain losses, ex. pain and suffering
o Higher standard for reliable evidence, ex. proof of lost profits
 Nominal damages are always available if you don’t have the certainty
o Problematic w/ new businesses
 No prior operating history  too speculative, BUT where a reasonable basis of computation exists,
damages may be properly given
 “Before and After Method”
 “yardstick test”  comparables
o UCC adopts a flexible approach  compensatory damages need only be proven in whatever manner is
reasonable under the circumstances
Avoidable Consequences
o Limits recovery when an injured party has failed to take reasonable steps to avoid or limit further losses
o In KFailure to meet the standard of reasonable mitigation excludes any damages that may be sustained
following the failure to undertake reasonable steps following the harm
 Denies recovery of certain damages that could have been avoided w/o excessive risk or burden
 Allows recovery of costs incurred in effecting mitigation
 Not required to anticipate harm
 Do not have to undertake extraordinary measures or suffer inconvenience or hardship in attempting
to mitigate losses
 Don’t have to be successful in mitigation  can still receive costs of the efforts
 Once a party breaches and gives notice, the other party cannot recover for work performed after the
notice of the breach  must cease performance
 Employment Ks  not required to seek or accept employment that was “different or inferior” in
order to mitigate damages
 UCC § 2-715  has this doctrine, ex. unreasonable delays obtaining replacement goods
o Tort  injured person obligated to exercise the care of a person of ordinary intelligence and prudence under
similar circumstances
 Whether or not a specific medical procedure is deemed reasonably will involve an assessment of
many factors, including the nature and extend of the risks presented, likelihood of success,
alternatives, the state of medical knowledge, the degree of possible complications, and the
money/effort required
 Never required to undergo recommended medical treatment, a tortfeasor may not be held
accountable for damages resulting from a disability or pain if medical treatment could have cured
the condition
 Tortfeasor has burden or pleading and proving failure to mitigate as an affirmative defense
Collateral Source Rule
o Only in tort
o All payments made by the responsible party to the PL, whether made prior to or following formal
adjudication of liability, are credited to offset damages owed  benefits PL receives from 3d parties will not
offset the amount owed from DF, ex. insurance
 Excludes introduction of evidence of such collateral source
o Eroded in many jurisdictions
Purely Economic Loss Rule
 Damages for purely economic loss are generally not recoverable in tort absent physical injury or property damage
o Precludes a stranger from recovering damages from DF’s tortious conduct
o When PL and DF have a contractual relationship, a PL can recover for economic losses in tort and limits the PL
to remedies under the K between the parties
 In tort, Courts have begun to erode it and permit exceptions:
o Some courts recognize a special duty to protect from an economic harm on certain classes of DFs
 Ex. permitted purely economic recovery against service professionals, ex. auditors, engineers
o Some courts recognize general exception when DF reasonably should foresee that its conduct may cause
economic harm to the PL
 The harm should be to a PL who is a member of an identifiable class of Pls
 Class identifiable in terms of, proximity to DF = predictable and the type of economic loss they might
suffer = predictable
o New Jersey Rule: Exception
 A DF owes a duty of care to take reasonable measures to avoid the risk of causing purely economic
damages to particular PLs comprising an identifiable class w/ respect to whom the DF knows or has
reason to know are likely to suffer such damages from its conduct
 In K, this rule precludes a PL from recovering for purely economic losses in tort when the PL and the DF have a
contractual relationship  limited to K remedies
o K law requires that consequential losses, like lost profits, must be foreseeable to the breaching party at the
time of the K, HOWEVER, K law also permits parties to limit liability for consequential losses like profits
 Thus, PL may not be able to recover her profits in a breach of K claim
 Defective Products
o If they cause personal injury or property damages may justify compensation for damages through either
negligence or strict liability  pecuniary losses become “parasitic” and attach to those damages to become
recoverable
o If a defect in a product causes physical injury to “other property” then tort remedies are available and to get
loss profits
o If the product is a component part that’s incorporated into another product, then an injury to the product as
a whole does not constitute “other property”  can get purely economic loss in tort
Distress Damages Alone
 Recovery for emotional distress in the absence of physical injury is significantly limited
 General Rule in K will not support distress damages
o Unless those damages were reasonably w/in the contemplation of the K parties when the K was made
 Ex. contracts between carriers and passengers, Ks between innkeepers and guests, Ks to handle dead
bodies and Ks for delivery of messages concerning death
o If it doesn’t fit in an exception, there is no recovery unless PL can also establish an independent tort
Punitive Damages
 Overlaps w/ criminal law  awarded to punish DF for egregious conduct and deter DF and others from future
offenses, “exemplary”
 Trier of fact has discretion to award and amount  can be set aside if it is so excessive that it appears to tbe the
product of passion or prejudice or shocks judicial conscience
 Generally not available for breach of K even if it was intentional or malicious
o To get around that restriction, many jurisdictions allow the PL to recover punitive damages for a breach of K
claim if the conduct giving rise to the breach also constitutes an independent tort
 Majority say that breach of implied covenant of good faith and fair dealing isn’t independent enough
either under the UCC or common law
 Scope
o Not available to redress all legal wrongs, must be used to punish and deter
o Typically, punitive damages are available where the DF acts w/ egregious misconduct, which is defined as an
evil motive such as spite, ill will, intent to injure or defraud, or when the DF acts w/ gross recklessness or in
willful disregard of the rights of others
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Gross Recklessness = DF knows of the risk of harm to the injured party and either fails to take
measures to avoid the harm or takes measures the DF knows to be ineffective to prevent it
o Majority of juris. Require “evil mind” or “malice”, intend to cause injury
Relationship to Claim
o Derivative  PL must succeed on underlying claim  then must establish entitlement to punitive damages
o Where underlying claim isn’t malicious  have to prove it
o Where underlying claim is malicious  don’t have to meet a higher standard
o Some states have heightened evidentiary standards that require egregious conduct to be established w/ clear
and convincing evidence
o Need not establish actual harm
 Majority: PL need not recover compensatory damages to recover punitive, nominal suffices
 Equitable relief will not support punitive
Insurance
o Growing trend recognizes an exception predicated on bad faith conduct w/ respect to insurance companies
and policy coverage claims
o Special relationship between insurer and insured support punitive damages
 Same justifications could be applied to employment contract?
Vicarious Liability
o Respondeat Superior (Some)
 A principal would be liable for punitive damages on the basis of the agent’s conduct whenever the
agent acted w/in scope of employment
o Complicity Liability in Rest. 2nd of Torts § 909 (Majority)
 Principal can be held vicariously liable for punitive damages only if:
 (1) the principal authorized, participated in, consented to or ratified the egregious act
 (2) the principal deliberately or recklessly employed an unfit agent, OR
 (3) the agent engaged in the egregious acts while employed w/in a managerial capacity and
acting w/in the scope of employment
Measurement
o Never awarded automatically, nor as a matter of right
o Factors Commonly Used in Determining the Amount:
 (1) the nature and reprehensibility of DF’s conduct
 (2) the seriousness of the harm resulting from the misconduct
 (3) the DF’s awareness that such harm would result
 (4) the duration of the misconduct, DF’s conduct upon discovery of his misconduct, and any effort to
conceal the misconduct
 (5) the profitability of the misconduct
 (6) the DF’s net wealth
 (7) the relationship between the actual harm and the amount of punitive damages, AND
 (8) the total deterrent effect of other damages and punishment imposed upon the DF
o Punitive damages are subject to judicial review and remitter
o Guideposts in determining whether a punitive damages award is unreasonably excessive and thus violates
the Due Process Clause:
 (1) the reprehensibility of the DF’s conduct
 (2) the ratio of punitive damages to the actual harm inflicted on the PL, AND
 (3) a comparison of the punitive damage award to the civil or criminal penalties that can be imposed
for similar misconduct
Financial Condition
o Most jurisdictions allow a PL to introduce evidence of a DF’s financial condition or net worth but do not
mandate that a PL introduce such evidence
Punitive Damages and Compensatory Damages
o Many jurisdictions require that punitive damages bear some reasonably relationships to the underlying
compensatory damages award,  no fixed ratio or proportion is mandated under the common law
o SCOTUS said in maritime cases, the ratio of 1:1 was the permissible upper limit in the absence of evidence of
exceptionally blameworthy conduct (ex. intentional or malicious conduct, or conduct motivated primarily by
financial gain)
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Constitutional Limits
o Excessive Fines Clause
 The Excessive Fines Clause of the 8th Am. did not apply to a civil jury award of punitive damages in
civil cases between private parties, only criminal
o Substantive Due Process
 SCOTUS recognized that the Due Process Clause of the 14th Am. imposes substantive limits on the
size of punitive damage awards and procedural limitations on the process by which state courts
award them
 Will invalidate awards that are grossly excessive in relation to the state’s legitimate interest in
imposing punitive damages – a court may not impose economic sanctions for violations of its laws
for the purpose of changing a DF’s lawful conduct in another state or impose punitive damages to
punish a DF for unlawful acts outside of the state’s jurisdiction
 Single digit ratio
o Procedural Due Process
 Juries may not impose punitive damages awards for conduct directed at 3rd parties
Reviewed de novo of whether it was constitutionally excessive
Unjust Enrichment (UNWARRANTED W/ EXPRESS K)
 Underlying policy is to prevent the unjust enrichment of a party who has received a benefit that in equity and good
conscience should not be retained
 Central Inquiry: Whether the claimant is rightfully entitled to the restoration of certain benefits which would
otherwise unjustly enrich the DF
o Inquiry: How do you quantify? Focus on the DF’s gain. Allows an award for the value of the benefit unjustly
received, rather than the value of the service provided
 Elements Of Unjust Enrichment:
o (1) The other party received a benefit
o (2) By receipt of the benefit the other party was unjustly enriched at the first party’s expense, AND
o (3) The circumstances were such that in good conscious the party receiving the benefit should make
compensation
 The mere fact that one party confers a benefit on another is not in itself sufficient to require that a party may
restitution  retention of the benefit w/o compensation must be unjust
 Benefits Acquired by Mistake
o Mistake in Agreements
 Restitution is a useful remedial option when one or both parties to a K have made a mistaken
assumption about something material to the K
 Nature of the remedy will depend upon when the mistake occurred and whether its mutual or
unilateral ex. rescission and restitution of the benefits conferred through reformation
o Mistake in Equity
 Invalidating transfers of property, ex. mistake, fraud, duress, undue influence
 May predicate the restitutionary award on finding flaws in the transferors consent
 Whether the claimant has conferred an unintended benefit on the DF under unjust
circumstances unless a court awarded restitution
 Ex. payment of money not due, mistake over boundaries, etc.
o Mistaken Improvement of Property
 Never automatic, rests with discretion of the court
 Balances the interest of awarding compensation to the mistaken improver for the benefits conferred
w/ concerns of unduly prejudicing the landowner by requiring payment for the unrequested
improvements
 Sometimes improvements cannot easily be severed from land
 Measurement of Restitutionary Award = reasonable cost of the goods and services rendered
or the increase in value of the property, whichever is less
 Happen through money judgment, equitable lien or remoal of the improvement
 Misrepresentation and Fraud
o When a K is voided, restitutionary relief may be granted to transfer any benefits conferred in the course of
party performance or reliance
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 Can either rescind the transaction OR
 Choose to affirm the agreement and seek damages associated with breach of warranty
o Restitution following rescission serves to disgorge any benefits the wrongdoer could have had
o The measure of recovery in restitution focuses on the DF’s gains, which might exceed the PL’s loss
Disgorgements
o Apply to past, not future
o Whenever the DF profits, sue in X to disgorge
o Involves taking the profits of all wrongful profits gained, useful when it’s hard to prove exact damages
Quantum Meruit (quasi-K/implied in law K)
o Implies a K where none exists and awards restitution for the value of the services provided under that K
 Provides a restitutionary vehicle to accomplish the conveyance of benefits to the claimant and
prevent unjust enrichment to the DF
 Measure = reasonable value of the materials or services
o Damages may be awarded even if the PL’s services conferred no actual benefit on the recipient
o To recover, PL must prove:
 (1) that the DF requested the PL’s services (or accepted services w/ knowledge that the PL expected
to be paid), AND
 (2) the PL reasonably expected to be paid
o Does not apply when goods/services are furnished gratuitously
o Directed at general assets
Implied in Fact K
o K found to exist through the intentions and conduct of the parties despite the lack of an explicit K
o PL may recover expectation damages or restitution  if the DF could not benefit at all from the benefit PL
provided, then choose implied in fact bc it provides expectation damages
Constructive Trusts
o A flexible restitutionary device that imposes an equitable duty on the DF to convey property acquired under
certain circumstances to the rightful owner
 Ex. where the title to property has been acquired by fraud, mistake, breach of a
fiduciary/confidential relationship, coercion, undue influence, duress, embezzlement, conversion
and unconscionable conduct
o Requires the claimant to identify the specific property that is subject to the trust and that can be traced to
the misappropriated property w/ reasonable certainty
 Amount received can exceed the amount of claimant’s loss bc the gains by the wrongdoer may be
disgorged
o Used when legal remedies are inadequate
o Doesn’t have to compete with other general creditors of the DF for finding assets to satisfy the claim
o Legal fiction designed to prevent unjust enrichment which would occur if the party kept the property
 May recover the property that has increased in value, ex money stolen and invested, get the bigger
amount
o Better when increased value
Equitable Liens
o Allow an aggrieved party to obtain a security interest in property where a benefit has been unjustly retained
has been invested in the property
 Tracing is still required and concerns specific property
o To execute on an equitable lien, the party needs foreclosure order from court
 If foreclosure does not generate enough money to satisfy the lien,  the party can obtain a
deficiency judgment against the wrongdoer for the balance of the claim
o Better when property cannot be completely conveyed
o Operates as a charge or encumbrance against specific property
o Limited to a certain sum, more advantageous when the property has declined in value
o Measure is governed by considerations preventing unjust enrichment, ex. enhancement of premises, or
reasonable value of labor/materials
Replevin  Cause of Action
o If no profit made from stolen good = return the detained property PLUS incidental damages (if no profit made
from stolen good)
o

If profit made from stolen good = unjust enrichment PLUS disgorgement
 Attaches restitutionary relief onto your claim
o Based upon the illegal acts of DF
Waiver of Tort and Suit in Assumpsit
o Statute of limitations for K claims apply, extends tort statute of limitation
o Legal restitutionary device that disgorges unjust enrich through quasi-Ks (alternative remedy to conversion
and sometimes profits gained from trespass)
o Money Had and Received
 The PL can recover any profit that the wrongdoer received at the expense of the PL under the fiction
that the thief was acting as the PL’s agent in selling the good
 Superior to compensatory damages for conversion where DF has resold the property for a price
greater than its fair market value
o Goods Sold and Delivered
 The PL recover the fair market value of any converted good under the fiction that the thief promised
to pay for it
 Produces same amount as conversion, but still extends the statute of limitations
Limitations on Restitutionary Remedies
 Tracing
o Where a wrongdoer comingles wrongfully and rightfully acquired funds and then acquires new property w/
the comingled funds, the rightful owner of the wrongfully acquired funds may share proportionately in the
property newly acquired w/ the comingled funds to the extent of his involuntary contribution.
o Both real property and liquid assets, such as stocks, and bank and investment accounts, may be subject to a
constructive trust.
o Where money is the asset upon which the constructive trust is based, it is necessary that the specific
amounts be identified and located by tracing the money to a specific and existing account. Where the funds
have been converted into another type of asset, such as real property, the money must be traced into the
item of property.
o Tracing is permitted even if the wrongfully acquired money is comingled w/ other money.
o When wrongfully acquired money is commingled w/ other money in an account, the party obtains a
constructive trust on the account up to the amount of the wrongfully acquired money
o If an excessive recovery in restitution by one claimant due to appreciation would detrimentally affect the
ability of other creditors to recover against the wrongdoer, then the restitution may be limited to the losses
sustained instead of allowing the disgorgement of the profits made on the wrongfully acquired property
o Methods:
 First in, First Out
 Jessel’s Bag
 First withdrawls = wrongdoer’s money
 Rest. 3rd. provides for dual presumption
 Withdrawls that are untraceable or unprofitable allocated to the wrongdoer
 Claimant retains ability to elect tracing and obtaining restitution of the product withdrawn
funds where that may yield an advantageous result
 Bona fide Purchaser
o To be a bona fide purchaser, the party must:
 (1) provide value for the property, AND
 (2) take the property w/o notice of the facts that give rise to an equitable resitiutionary interest
 Encompasses both actual knowledge as well as imputed or constructive knowledge, where
the party has reason to know (ex. statutes) and includes a general duty of due diligence to
inquire about the facts
 Change in Position
o A court may deny a restitutionary remedy either partially or completely if the DF would be adversely affected
by virtue of the circumstances which have materially changed after the receipt of the benefit
o Dissipation of funds in normal living expenses, w/o more, is not generally considered a change in position
that discharges an obligation to repay
 Must cause a direct causal relationship btwen receipt of funds and the expenditure
Attorney’s Fees
 General Rule: prevailing party is not entitled to recover its attorney’s fees
 Rule 11 and 37 of FRCP provide courts the authority to award attorneys’ fees
 Parties can provide for attorney’s fees in a k
 Equitable Exceptions to the American Rule
o Bad Faith Litigation
 Court has inherent equitable power to award reasonable attorneys fees to prevailing party whent eh
losing party has acted in “bad gaith, vexatiously, wantonly or for oppressive reasons” in the conduct
og th litigation”
 The claim must be frivolous or w/o merit
o Common Fund
 Where litigation produces a common fund for the benefit of a group of claimants, ex. class action
 Attorney’s fees are taken directly from the pool of damages before the sums are distributed to the
successful claimants
o Substantial Benefit Theory
 Applies where litigation produces a substantial benefit for a certain class of beneficiaries
 The benefits may be intangible rather than leading to a creation of a specific fund
o Private Attorney General
 Provides attorney fees to a successful litigant who acts in a capacity as “private attorney general”
with respect to a matter promoting public interest
 Rejected on Federal level, but Congress enacted the Civil Rights Attorneys Fees Act which does the
same thing essentially (still Gucci on state level)
 Federal Fee Shifting Statutes
o Provides that the court, in its discretion, may allow the prevailing party to recover a reasonable attorney’s fee
as part of the costs
o Courts presumptively allow the recovery and do not require a further showing of bad faith
o Prevailing? Must achieve some degree of success = the party must succeed on a significant issue in the
litigation which achieves some benefit the party sought in bringing the action
 Doesn’t have to be the central issue
 Q: whether the legal relationship of the parties was ‘materially altered’ in a manner consistent w/
the intentions of Congress in the fee shifting statute
o Frivolous claims? Only to the extent that the costs were directly related to those claims
 Measurement under Federal Rules
o Lodestar Approach
 Multiplies a reasonable hourly rate for each attorney times the number of hours reasonably spent on
the litigation
 Adjusted up or down in light of the degree of success obtained
 Presumptively reasonable, subject to adjustment in only rare or exceptional circumstances
Declaratory Remedies
 Nominal Damages
o A court awards nominal damages when a PL has been able to establish the violation of a right but cannot
establish the requirements of remedies that would otherwise be available
 Declaratory Judgments
o Gives courts the power to determine the rights or legal relations of parties to a justifiable controversy
o Don’t have to show that other remedies are inadequate
o PL must allege that there is a case or controversy between the parties that would be resolved, in whole or in
part, by a declaratory judgment by the court in order for the court to hear the action
o Reviewable as final judgements and have res judicata effect
Abstention? Look at sheet too tired
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