Remedies Outline
*****Tort Remedies*****
I.
Tort Remedies
a. Legal Remedies
i. Damages (defendant is ordered to pay money to the plaintiff)
1. Compensatory Damages (based on the injury/harm to the plaintiff)
a. Put the injured party in the position he would have been in
had the injury not occurred (make him whole)
b. Four Requirements for Recovery:
i. Actual Causation
1. “But for” the defendant’s conduct, the injury
would not have occurred
ii. Foreseeability (proximate causation)
1. The injury must have been foreseeable by
the defendant at the time of the tortious act
iii. Certainty
1. The damages cannot be too speculative
a. Past losses must be established with
more certainty than future losses
(e.g., past medical expenses must be
proven with records/receipts; future
medical expenses can be more
speculative)
2. If there is a historical record, that can help to
provide certainty (e.g., If defendant causes
plaintiff’s restaurant to burn down, and the
restaurant has been in business for three
years, the historical record of the
restaurant’s profits over the years can be
used to determine what his lost profits will
be for the next year while the building is
being rebuilt)
3. For future damages (e.g., future lost
income), the plaintiff must show that the
damages are more likely to happen than not
(“all or nothing rule”)
a. If the odds are more than 50/50,
plaintiff can recover everything, but
if the odds are less than 50/50, the
plaintiff can recover nothing
iv. Unavoidability
1. Plaintiff must have taken reasonable steps to
mitigate damages
c. Personal Injury Torts (a particular problem area)
i. Certainty Rules
1. Certainty rules apply with regard to
economic losses (special damages) (e.g.,
medical expenses, lost earnings).
2. Certainty rules do not apply to noneconomic losses (general damages) (e.g.,
pain and suffering; permanent
disfigurement). The jury may award any
amount is wishes (subject to proper
instructions)
ii. Form of Judgment Payment
1. Award must be a single lump sum payment
(cannot be made in installments)
2. Award must be discounted to present value
3. Inflation is not taken into account (but there
is a modern trend to take this into account)
2. Nominal Damages (awarded when the plaintiff has no actual
injury)
a. Serve to establish or vindicate the plaintiff’s rights
i. Examples: Defendant regularly trespasses across the
plaintiff’s property to get to the bus; Defamatory
statements made against a plaintiff where there is no
actual economic injury (doesn’t lose his job, etc.)
3. Punitive Damages (awarded to punish the defendant)
a. Requirements:
i. Plaintiff must have first been awarded
compensatory, nominal, or restitutionary damages
ii. Defendant’s fault must be greater than negligence
iii. Award must be for an amount relatively
proportionate to actual damages (some
proportionality)
1. Rule of thumb: Punitives awarded should be
no more than a single digit multiple of actual
damages
b. Restitutionary Remedies (based on the concept that the defendant should not be
“unjustly enriched”)
i. Legal Restitutionary Remedies
1. Restitutionary Damages (based on the benefit to the defendant)
a. If both compensatory and restitutionary damages are
available, plaintiff must elect one or the other (the one that
will give him the greatest recovery)
i. Example: Plaintiff had a piece of vacant land
containing a dirt road that the defendant’s trucks
crossed everyday as a shortcut. Plaintiff isn’t really
injured (nominal damages), but defendant benefited
(less gas expended, less travel time, etc.).
ii. Example: Defendant steals plaintiff’s machine to
use in its business. Plaintiff is injured (had to rent
another machine or produced less) and entitled to
compensatory damages. Defendant receives the
benefit of using the machine without paying for it.
Both compensatory and restitutionary damages are
available, but plaintiff must choose one or the other.
Plaintiff may also be able to get punitives.
b. Restitution is never available for encroachment (onto
plaintiff’s land) or nuisance cases!
2. Replevin (to regain possession of personal property (chattels))
a. Requirements:
i. Plaintiff has a right to possession; and
ii. Wrongful withholding by the defendant
b. Plaintiff can recover the chattel before the trial if:
i. There is some preliminary judicial hearing (and
judge determines there is some colorable claim);
and
ii. Plaintiff posts a bond (to ensure that a plaintiff not
entitled to replevin can pay the defendant damages
for his loss of the chattel during the trial)
c. Defendant can defeat immediate recovery by the plaintiff
(before trial) if he posts a “redelivery bond” (defendant can
then keep the chattel until after trial)
d. In a replevin action, the sheriff repossess the property for
the plaintiff
e. Replevin is almost always coupled with damages
(compensatory or restitutionary) for lost use or the benefit
to the defendant during the time of wrongful detention
f. Plaintiff’s rights to replevin are cut off by the transfer of
legal title to a bona fide purchaser for value
g. Note: Self-help may also be available (reasonable force can
be used to recapture property)
3. Ejectment (to recover possession of real property)
a. Requirements:
i. Plaintiff has a right to possession;
ii. There is a wrongful withholding by the defendant;
and
iii. Defendant has actual possession of the property
(isn’t just trespassing on it) (e.g., holdover tenant at
the expiration of the lease)
b. Ejectment is almost always coupled with damages
(compensatory or restitutionary) for lost use or the benefit
to the defendant during the time of the wrongful
withholding
c. Note: Self-help may also be available (reasonable force can
be used to recapture property)
ii. Equitable Restitutionary Remedies (consider both together and determine
which remedy plaintiff will ultimately choose)
1. Two Types:
a. Constructive Trust (plaintiff should select if the property
value goes up in value subsequent to the taking)
i. Requirements:
1. Defendant has improperly acquired title to
property at the expense of the plaintiff (e.g.,
through fraud, undue influence, abuse of
confidence, mistake, etc.);
2. Defendant’s retention of the property would
result in unjust enrichment; and
3. Plaintiff has no adequate remedy at law
(damages are inadequate)
a. Defendant is insolvent; or
b. The property is unique
ii. Defendant is ordered to serve as a “trustee” and
must return the property to the plaintiff
iii. Plaintiff becomes a secured creditor (entitled to
recover the specific property constituting the trust
res)
b. Equitable Lien (plaintiff should select if the property value
goes down subsequent to the taking)
i. Requirements:
1. Defendant wrongfully acquired title to
property at the expense of the plaintiff (e.g.,
through fraud, undue influence, abuse of
confidence, mistake, etc.) or has improved
property he already owns using money or
property wrongfully obtained from the
plaintiff
2. Defendant’s retention of the property would
result in unjust enrichment; and
3. Plaintiff has no adequate remedy at law
(damages are inadequate)
a. Defendant is insolvent
ii. Property will be subject to an immediate courtordered sale
1. The money recovered will go to the plaintiff
2. If the proceeds of the sale are less than the
fair market value of the property when it was
taken, a “deficiency judgment” will issue for
the difference, and this can be used against
the defendant’s other assets
a. However, to the extent a plaintiff has
a deficiency judgment, the plaintiff
will stand in line with other
unsecured creditors
3. Plaintiff will have priority over unsecured
creditors
2. Rules (for both types)
a. Tracing is allowed (e.g., if defendant sells the property, you
can trace the profits)
i. When the defendant’s property cannot be traced
back to only the plaintiff’s property (e.g., funds are
commingled or defendant’s property was merely
improved with the plaintiff’s property), only an
equitable lien is available
1. Example: D misappropriates money from
the plaintiff and uses it to remodel his house.
Since title to the home was not obtained by
use of the plaintiff’s money, the proper
remedy is an equitable lien.
2. If withdrawals from a commingled bank
account causes the balance to sink below the
plaintiff’s claim, the lien is limited to the
lowest account balance between the time of
wrongdoing and the suit (“lowest
intermediate balance”)
b. Bona fide purchasers prevail over the plaintiff
c. Equitable Remedies
i. Injunctive Relief (where court orders defendant to do something or refrain
from doing something)
1. Temporary Injunction (or Preliminary Injunction) (issued pending
a trial on the merits)
a. Requirements:
i. Notice (and an opportunity for defendant to argue
against it)
ii. Irreparable Injury
1. If plaintiff had to wait for a full hearing on
the merits, between now and then, he would
suffer irreparable injury
2. A loss related to “unique” property (e.g.,
land, family heirloom, etc.) is regarded as an
irreparable harm
iii. Plaintiff has a likelihood of success on the merits
1. When the full hearing occurs, the odds are in
the plaintiff’s favor that an injunction will
issue
iv. Hardships balance in the plaintiff’s favor (or the
harm to the plaintiff is very severe/serious)
v. Plaintiff should be required to post a bond (to
reimburse the defendant if the injunction injures
him and the plaintiff does not succeed)
b. Temporary Restraining Order (TRO)
i. Issued pending a hearing to determine whether a
temporary injunction should issue
ii. Can be issued ex parte
1. Notice to defendant is not required (but a
good faith effort to reach the defendant
should be made)
2. An adversarial proceeding is not required
iii. Duration must not exceed 10 days (must have a
regular temporary injunction hearing by then)
iv. All other requirements for temporary restraining
orders must be met
2. Permanent Injunction (if there has been a full hearing on the
merits)
a. When faced with a question asking if someone is entitled to
an injunction, you must first analyze whether the firm has a
cause of action to begin with (for the tort), because an
injunction will not issue unless the firm can demonstrate it
is entitled to relief
b. Requirements:
i. Notice to Opponent
ii. Inadequacy of Legal Remedies
1. Examples: Damages (are too speculative;
defendant is insolvent; injury is only
threatened; court wants to avoid a
multiplicity of actions if parties have a prior
history; plaintiff is trying to protect an
interest in land, like relief against nuisance
or trespass; loss involves “unique” property,
like land or family heirlooms); Replevin
(cannot locate chattel; defendant has
destroyed it); and Ejectment (sheriff may
refuse to act if encroachment onto plaintiff’s
land is minor) would be inadequate
iii. A “Property Right” (or “protectable interest”)
1. Traditional/Majority Rule
a. Equity will grant relief only where a
protectable property right is involved
(e.g., trademarks, reputation, etc.)
2. Modern Trend
a. A protectable interest will suffice
(e.g., right to do business, etc.)
iv. Feasibility of Enforcement
1. Negative Injunction (orders defendant to
stop doing something)
a. No enforcement problem
2. Mandatory Injunction (orders defendant to
affirmatively do something; perform an act)
a. There may be an enforcement
problem based on:
i. The difficulty of supervision;
or
ii. Concerns with effectively
ensuring compliance
b. If the act involves the application of
great taste, skill, or judgment:
i. Injunction will be denied
(because we don’t know the
defendant will perform the
act with the requisite degree
of taste, skill, or judgment
necessary)
c. If the act involves a series of acts
over a period of time:
i. Injunction will be denied,
unless the plaintiff’s case is
great (because it will be
difficult to enforce and
supervise all of the acts)
d. If an out-of-state act is required:
i. Resident Defendant:
Injunction will be granted
ii. Non-Resident Defendant:
Injunction will be denied
v. Hardships Balance in Plaintiff’s Favor (plaintiff’s
benefit vs. defendant’s hardship if injunction is
granted)
1. For the defendant to avoid an injunction,
there must be a gross disparity between
detriment and benefit (if injunction issues,
defendant will incur a lot more detriment
than the benefit plaintiff will receive)
a. Even if defendant can show a gross
disparity, there will be no balancing
of the hardships (and injunction will
issue) if the defendant’s conduct was
willful
2. If the court decides to balance the hardships
(and defendant’s hardship will be great), the
court should consider awarding the plaintiff
money damages instead of issuing the
injunction
3. Hardship to the public is also taken into
account
a. Example: Company that is polluting
the air has taken as many precautions
as possible, but is still a nuisance to a
neighboring house (plaintiff). If an
injunction issued to prevent the
company from operating, 500
employees would be laid off. The
defendant’s hardship (leaving useless
buildings, relocation costs, severance
pay to laid off employees, etc.) and
the public’s hardship (500 laid off
workers, etc.) would lead the court to
deny the injunction. Court would
then consider awarding the plaintiff
money.
vi. Defenses Are Overcome
1. Unclean Hands (plaintiff was a “bad guy”
too and doesn’t deserve relief)
a. Only available if the plaintiff’s
alleged improper conduct is related
to the lawsuit
2. Laches (delay; “running of a period of time”
defense) (e.g., plaintiff sits around and
watches the defendant do something before
he contests it)
a. Clock starts to run when the plaintiff
knows of the injury
b. Delay cuts off the right of the
plaintiff to get relief when it has
been both unreasonable and
prejudicial to the defendant
c. If laches does apply to prevent an
injunction, the court will consider
awarding the plaintiff money
damages instead
3. Impossibility
a. Defendant claims it is impossible for
him to carry out the terms of the
injunction
4. Free Speech
a. If the tort is defamation or a privacy
publication branch tort (false light,
disclosure of private facts), the
injunction will be denied on free
speech grounds
3. Miscellaneous Injunctive Relief Issues
a. Crimes
i. Equity will not enjoin crimes (however, almost all
criminal acts can also be characterized as torts)
b. Who Will Be Bound By An Injunction
i. Parties (the defendant);
ii. Employees and agents acting with notice; and
iii. Others acting “in concert” with notice
1. Example: M makes celebrity tee-shirts
without the celebrities’ permission. A
celebrity seeks an injunction and it is
granted. Vendor at a stadium, who knew of
the injunction, continued to buy the teeshirts from M and continued to sell them.
He is not an agent or employee, but he will
be bound by the injunction
c. Erroneous Injunctions
i. If an erroneous (e.g., unconstitutional) injunction is
issued, one must still obey it (until it is modified or
absolved)
d. Contempt (issued for disobeyance of a court order)
i. Civil Contempt (to coerce defendant to comply with
the injunction)
1. Money (fines) (court may also award
damages to the plaintiff in its discretion)
2. Imprisonment
a. Defendant holds the keys to the
jailhouse and will be released when
he is ready to comply with the
injunction
ii. Criminal Contempt (to punish the defendant)
1. Fines (assessed and set)
2. Imprisonment
a. Defendant cannot get out of jail
earlier than the sentence set by the
court
3. Constitutional safeguards apply
iii. There is no contempt (criminal or civil) for noncompliance with a money judgment
1. Exception: Defaults in alimony and child
support payments
e. Injunctions are almost always coupled with damages for
injuries incurred in the time period prior to obtaining the
injunction
II.
NOTE: Satisfaction
a. If a plaintiff recovers full payment from one tortfeasor, either by settlement or
payment of a judgment, there is a “satisfaction” and she may not recover further
against any other joint tortfeasors
i. However, until there is a satisfaction, she may proceed against other
jointly liable parties
*****Contract Remedies*****
III.
Legal Remedies
a. Damages
i. Compensatory (based on the injury to the plaintiff)
1. To make the party whole (as if the contract had been fully
performed)
2. Requirements:
a. Causation (but for the defendant’s breach, the injury to the
plaintiff would not have occurred)
b. Foreseeability (at time of contract formation)
c. Certainty
d. Unavoidability (mitigation of damages)
ii. Consequential Damages
1. Available for related damages (those that don’t flow naturally
from the breach) that were foreseeable at the time of formation
a. Example: Reputation Fact Pattern. A construction contract
between a company and a contractor provided for a certain
quality of materials to be used. The contractor intentionally
used substandard materials. Compensatory damages for
either tearing the building down and rebuilding, or for a
reduced sale value, are available. Also, the company had a
lot of publicity about this construction project and the
company’s reputation would take hit because it either
wouldn’t sell it with top of the line materials or the project
would be delayed. Company may be able to recover
consequential damages for this because contractor knew
about all of the publicity and the reputation of the company
at contract formation.
iii. Nominal Damages
1. Can be recovered (but in a commercial setting, no one would really
sue for them)
IV.
iv. Punitive Damages are not awarded in contract cases
1. If the defendant’s conduct is willful, try to classify it as a tort too
b. Liquidated Damages Clauses
i. If a contract has a valid liquidated damages clause, actual damages are not
available (liquidated damages are awarded in lieu of actual damages)
ii. Requirements For a Valid Liquidated Damages Clause:
1. Damages were very difficult to ascertain at the time of contract
formation; and
2. The amount of liquidated damages stated was a reasonable
forecast/estimate of what actual damages would be
iii. If a liquidated damages clause allows the parties to select either liquidated
damages or actual damages, it is invalid (cannot give parties a choice)
iv. If a liquidated damages clause is invalid, the parties may seek actual
damages
Restitutionary Remedies
a. Legal Restitutionary Damages
i. Restitutionary Damages (quasi-contract remedies)
1. Apply when a party renders some performance pursuant to a
contract and then the contract fails because it is unenforceable or it
is breached
a. If Contract Fails Because It Is Unenforceable (e.g., through
mistake, lack of capacity, statue of frauds, or illegality)
i. The plaintiff can get restitutionary damages for the
property/money given to, or services rendered for,
the defendant for the value of the benefit to the
defendant
1. Even if the defendant did not actually use
the benefit, he still must pay the value of the
benefit
a. Example: Plaintiff sells store fixtures
to the defendant for a new store
pursuant to an unenforceable
contract. Defendant will have to pay
restitution, even if he decides not to
open the store and repudiates the
contract
ii. Plaintiff can recover restitutionary damages for
more than the contract price
iii. If plaintiff has delivered property to the defendant,
the plaintiff can get their property back if it is
unique or if the defendant is insolvent
b. If Contract Fails Due to Breach
i. Plaintiff is the Non-Breaching Party
1. Plaintiff can receive restitutionary damages
for property/money given to, or services
rendered for, the defendant for the value of
the benefit to the defendant (even if
defendant did not actually use the benefit)
2. Recovery can be greater than the contract
price
3. Plaintiff can receive their property back if it
is unique or the defendant is insolvent
ii. Plaintiff is the Breaching Party (plaintiff partially
performed under the contract and then breached)
1. Traditional/Majority Rule:
a. Plaintiff cannot recover restitution
2. Modern Trend:
a. Plaintiff can recover restitution, but:
i. Plaintiff cannot recover more
than the contract amount; and
ii. Plaintiff’s recovery is
reduced by any damages
suffered by the defendant as a
result of the plaintiff’s breach
V.
ii. Replevin
iii. Ejectment
b. Equitable Restitutionary Remedies
i. Constructive Trust
ii. Equitable Lien
Equitable Remedies
a. Specific Performance (to force a party to perform the contract according to its
terms)
i. Requirements:
1. Contract Is Valid and Its Terms are Certain and Definite
a. Plaintiff must show the contract terms with more certainty
and definiteness than what would be required in an action
for money damages at law
2. Contract Conditions of the Plaintiff Are Satisfied
a. Plaintiff must be able to show that his contract conditions
have been fulfilled (already performed, ready and able to be
performed, or are excused from being performed)
b. The Only Two Bar Exam Fact Patterns (both involving
land sale contracts)
i. Deficiencies Fact Pattern (seller cannot deliver the
agreed upon consideration; e.g., structural damage
to a house that has been contracted for purchase)
1. If Plaintiff Is the Seller
a. Plaintiff can enforce the contract
through specific performance only if
the defect is minor
b. Plaintiff cannot enforce the contract
through specific performance if the
defect is major, unless the
plaintiff/seller can cure the defect
before closing
2. If Plaintiff Is the Buyer
a. Plaintiff/buyer can enforce the
contract through specific
performance, even if the defect is
major
b. Plaintiff/buyer cannot enforce the
contract through specific
performance if the defect is very
major
3. If specific performance is granted, even
though a defect still remains, the court will
lower the purchase price (through “an
abatement”) to take into account this defect
in consideration.
ii. Time Is of the Essence Clause Fact Pattern
1. A land sale contract will contains an express
“time is of the essence clause” and a
forfeiture provision stating that if
performance is not timely rendered, all
rights and obligations will cease to exist and
all performance rendered to date shall be
forfeited. After the buyer makes a late
payment, the seller claims the contract and
all prior payments made by the buyer are
forfeited. Buyer will sue for specific
performance.
2. “Equity abhors forfeitures,” so the court will
try to avoid the harsh result of a forfeiture
clause
a. Factors that will lead the court to
avoid the forfeiture clause and award
specific performance:
i. Loss to the seller is small;
ii. The tardiness is de minimis;
iii. Waiver (seller has accepted
late payments in the past);
and/or
iv. Buyer would suffer undue
hardship
3. Courts will almost always award specific
performance in this fact pattern, but under
the modern trend, courts will award the
plaintiff restitutionary relief if specific
performance is not granted
4. This fact pattern relates to partially
performed contracts. If the contract is
wholly executory (i.e., buyer has done
nothing yet), the time is of the essence
clause will be strictly enforced
3. Legal Remedies Are Inadequate
a. Damages can be inadequate because they are too
speculative, the defendant is insolvent, multiple suits
between the parties are likely to occur, and/or the thing
bargained for is “unique”
i. “Unique”
1. Real property/land is “unique,” even if the
plaintiff could receive money damages, and
even if the parcel looks ordinary/empty or
identical to other lots
2. Personal property is not unique
a. Exceptions:
i. If the personal property is
very rare or is one of a kind;
ii. If the personal property has
personal significance to the
buyer; or
iii. If circumstances have made
the personal property unique
(e.g., during a severe gas
shortage, gasoline could be
considered unique)
3. Uniqueness matters at the time of litigation,
not at the time of contract formation (e.g., if
gasoline was not unique at the time of
contract formation, but is unique at trial, it is
unique)
ii. Special “Seller’s” Rule
1. Sellers of land can get specific performance
even though all they have coming to them is
money (i.e., the purchase price)
b. A liquidated damages clause does not make money
damages adequate (specific performance is still available),
unless the clause provides that liquidated damages are to be
the sole remedy
4. There Is Mutuality of Remedy or Performance
a. Traditionally, a plaintiff could not be granted specific
performance unless she could demonstrate that the
defendant could have obtained such relief against her had
she breached (mutuality of remedy)
i. Example: If the plaintiff to a contract lacks capacity
(e.g., is under age 18 at contract formation) and
brings an action against the defendant for specific
performance, the defendant will argue that the
plaintiff should not be able to enforce the contract
against him because the defendant could not enforce
it against the plaintiff (voidable by the plaintiff for
lack of capacity).
b. Modernly, courts have replaced the mutuality of remedy
requirement with mutuality of performance, and specific
performance will be granted if both parties can and will
perform
i. The specific performance decree will provide for
simultaneous performance (e.g., deed and money
are exchanged at the same time)
5. There Are No Available Defenses to Specific Performance
a. Equitable Defenses
i. Unclean Hands
ii. Laches
iii. Unconscionability (at the time of contract
formation)
1. More than simply a “bad deal.” Something
in the way the contract was brought about
must “smell” funny
iv. Mistake
v. Misrepresentation
vi. Statute of Frauds
1. If one party to an oral contract involving
land has rendered valuable part
performance in reliance on the contract, this
will take the case out of the statute of frauds
and specific performance will be granted
a. “Valuable Part Performance”
i. Any two of these three will
suffice: Payment (in whole or
in part); Possession; and/or
Valuable Improvements
ii. Modern trend says that
valuable services will suffice
ii. Two Specific Performance Problem Areas
1. Equitable Conversion (involving a land sale contract)
a. Once a land sale contract is specifically enforceable, an
equitable conversion occurs and the property interests of
the buyer and seller are regarded as switched (i.e., buyer is
regarded as having the real property interest, the
specifically enforceable right to the land; the seller is
regarded as having the personal property interest, the
specifically enforceable right to the money)
b. Where Death or Destruction Occurs Between Contract
Execution and Closing (assuming there was an equitable
conversion)
i. Death of One of the Parties
1. If the seller in a specifically enforceable
land sale contract dies before closing, the
beneficiary who was to receive the land
under the seller’s will shall receive nothing,
and the purchase price will go to the devisee
who is to take the testator’s personal
property (or to the residuary)
ii. Damage/Destruction to the Property
1. Risk of Loss
a. Majority Rule: The risk is on the
buyer
i. Exception: If the loss is
brought about by the seller’s
negligence, risk of loss will
be on the seller
b. Modern Trend: The risk is on the
seller
i. Exception: If at the time of
the loss the buyer has either
legal title or possession, the
risk will be on the buyer
2. Right to Insurance Proceeds
a. Whoever has the risk of loss should
get any insurance proceeds (and if
the buyer has the risk of loss and the
insurance proceeds go to the seller,
the buyer can get them using the
constructive trust remedy)
2. Employment Contracts
a. Employment contracts are not specifically enforceable (due
to enforcement problems and the public policy against
involuntary servitude)
b. Negative Covenant Enforceability (when an employment
contract contains a covenant not to compete)
i. An employer can, pursuant to a covenant not to
compete, prevent the breaching employee from
competing against the employer (or possibly from
working for competitors), if the employer can show:
1. The covenant protects a legitimate interest
of the person in whose favor it runs (i.e., the
service is “unique”); and
2. The covenant is reasonable in both its
geographical and durational scope
b. Equitable Rescission (court rescinds the contract through an order)
i. Remedy whereby the original contract is considered voidable and
rescinded
ii. Requirements:
1. Proper Grounds for Rescission (all relate to contract formation)
a. Mistake
i. Mutual Mistake (both parties were mistaken)
1. If there is mutual mistake of a material fact,
rescission will be granted
a. Example: A and B enter into a
contract for the sale of a warehouse
building that they both mistakenly
believe is in good condition, but in
fact it has major structural damage.
This is a material fact and rescission
will be granted.
2. If there is mutual mistake of a collateral fact
(one going to quality, desirability, or fitness
of property for a particular purpose),
rescission will be denied
ii. Unilateral Mistake (one party is mistaken)
1. Rescission is generally denied
a. Traditional Exception:
i. Where the non-mistaken
party knew of, or should have
known, of the mistake
b. Modern Trend Exception:
i. Rescission will be granted if
the mistaken party would
suffer undue hardship
without rescission
b. Misrepresentation
i. In order to rely on the grounds of misrepresentation,
the plaintiff must show he properly relied on the
misrepresentation
1. Innocent (or negligent) Misrepresentations
a. Requires reasonable reliance by the
plaintiff
2. Intentional (fraudulent) Misrepresentations
a. Requires only actual reliance by the
plaintiff
c. Coercion
d. Undue Influence
e. Lack of Capacity
f. Failure of Consideration
g. Illegality
2. There Is No Valid Defense to Rescission
a. Possible Defenses
i. Unclean Hands
ii. Laches
b. Negligence of the plaintiff is never a good defense
iii. Three Specific Issues Dealing With Rescission
1. Election of Remedies
a. If a plaintiff sues for damages first, rescission is not
allowed (regarded as an affirmance of the contract)
b. If a plaintiff sues for rescission first, damages are also
allowed
c. Plaintiff can sue for both at the same time, but must elect
the preferred remedy before judgment
2. Availability of Restitution
a. If there has been some partial performance under the terms
of the contract and the contract is going to be rescinded,
restitution is also available
3. Legal Rescission (plaintiff accomplishes rescission through her
own actions)
a. Plaintiff gives notice of rescission to the defendant and
tenders back any consideration received
b. Plaintiff may then sue for restitution if defendant refuses to
return something given to him by the plaintiff under the
contract
c. Reformation (changes a written agreement to conform with the parties’ original
understanding)
i. Requirements:
1. Valid Contract
2. Proper Grounds for Reformation
a. Mistake
i. Mutual Mistake
1. Reformation will be granted
ii. Unilateral Mistake
1. Reformation will be denied
a. Exception: Where the non-mistaken
party actually knows about the
mistake (regarded as fraud or
inequitable conduct)
b. Misrepresentation
i. Reformation will be granted, and is available for
both innocent and intentional misrepresentations
(because rewriting reflects the expressed intent of
the parties)
3. There Are No Valid Defenses Against Reformation
a. Available Defenses
i. Unclean Hands
ii. Laches
b. Non-Defenses (defenses that will never work)
i. Negligence of the plaintiff
ii. Statute of frauds
iii. Parol Evidence Rule
Basic Bar Exam Fact Patterns & Available Remedies
TORTS
Destroyed Property or Damaged Property (including encroachment/nuisance)
a. Compensatory Damages
VII. Dispossession of Personal Property
a. Compensatory Damages; Restitutionary Damages (if defendant benefits);
Replevin; Mandatory Injunction (if chattel is unique and damages/replevin won’t
work); Constructive Trusts/Equitable Liens (particularly if defendant is insolvent
and/or tracing is involved); Self-Help (reasonable force to recapture);
VIII. Simple Trespass
a. Nominal Damages; Injunction (to avoid multiplicity of actions)
IX.
Destruction/Damage of Realty
a. Compensatory Damages; Injunction
X.
Dispossession of Real Property
a. Compensatory Damages; Restitutionary Damages; Ejectment (since this is
available, no injunction is available)
XI.
Encroachment
a. Compensatory Damages; Injunction; No Restitution
XII. Nuisance
a. Compensatory Damages; Injunction; No Restitution
XIII. Personal Injury Torts
a. Compensatory Damages; Injunction (only against prospective intentional tortious
conduct)
XIV. Fraud
a. Damages; Constructive Trust/Equitable Lien
XV. Note: Always consider if the tort claim should also be analyzed as a contract case and
whether punitive damages should be awarded (if conduct is really wrongful and
egregious)
VI.
CONTRACTS
XVI. Personal Property Sale Contracts
a. Compensatory Damages (for seller’s breach; for buyer’s breach)
b. Restitution (especially in unenforceable/breached contracts)
c. Specific Performance (property is not unique though, except for certain
exceptions)
d. Rescission
e. Reformation
XVII. Real Property Sale Contracts
a. Compensatory Damages (for seller’s breach; for buyer’s breach)
b. Restitution (especially in unenforceable/breached contracts)
c. Specific Performance (land is unique; both buyer and seller can get specific
performance; remember deficiencies/time of the essence clauses and equitable
conversion)
i. Rescission
ii. Reformation
d. Construction Contracts
i. Compensatory Damages (for owner’s breach; for builder’s breach)
ii. Restitution (typically only available for the builder for work already done,
unless the seller pre-paid)
iii. Specific Performance (typically only for the owner, but very difficult due
to enforcement problems)
e. Personal Services Contracts
i. Compensatory Damages (for employer’s breach; for employee’s breach)
ii. Restitution (typically only for the employee for services rendered, unless
employer pre-paid)
iii. Specific Performance (not available in an employment contract; available
for a valid covenant not to compete)