Section 12.2
Remedies of the Injured Party
Section 12.2 Remedies of the Injured Party
What You’ll Learn
How to explain the concept of
anticipatory breach (p. 250)
How to identify remedies available for
breach of contract (p. 250)
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Section 12.2 Remedies of the Injured Party
What You’ll Learn
How to define specific performance
(p. 253)
Why you must minimize the damages
involved in a breach of contract (p. 252)
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Section 12.2 Remedies of the Injured Party
Why It’s Important
Understanding the remedies available when
a contract is breached will help you pursue
satisfaction if this happens to you.
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Section 12.2 Remedies of the Injured Party
Legal Terms
breach of contract (p. 250)
anticipatory breach (p. 250)
damages (p. 251)
actual damages (p. 251)
incidental damages (p. 251)
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Section 12.2 Remedies of the Injured Party
Legal Terms
liquidated damages (p. 251)
mitigation of damages (p. 253)
specific performance (p.253)
injunction (p. 255)
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Section 12.2 Remedies of the Injured Party
Section Outline
Breach of Contract
Damages
Acceptance of Breach
Money Damages
Actual and Incidental Damages
Liquidated Damages
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Section 12.2 Remedies of the Injured Party
Section Outline
Minimizing Damages
Equitable Remedies
Specific Performance
Injunction
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Section 12.2 Remedies of the Injured Party
Pre-Learning Question
What is a breach of contract?
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Section 12.2 Remedies of the Injured Party
Breach of Contract
A breach of contract occurs when
one party to a contract fails to perform
the duties set out in the terms of the
agreement.
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Section 12.2 Remedies of the Injured Party
Breach of Contract
Sometimes parties to a contract notify
the other that they will not go through
with the contract before the time for
performance.
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Breach of Contract
They have breached, or violated, the
agreement before they were required
to act.
This is called anticipatory breach.
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Section 12.2 Remedies of the Injured Party
Pre-Learning Question
What do you think happens when a
contract has been breached?
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Section 12.2 Remedies of the Injured Party
Damages
When a contract is breached, the
injured party has a choice of
remedies.
A remedy is a legal means of
enforcing a right or correcting a
wrong.
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Section 12.2 Remedies of the Injured Party
Damages
The injured party has three options:
1. accept the breach
2. sue for money damages
3. ask the court for an equitable
remedy
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Section 12.2 Remedies of the Injured Party
Acceptance of Breach
If one party breaches a contract, the
other party has an excuse not to
perform and may simply accept the
breach and consider the contract
discharged.
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Section 12.2 Remedies of the Injured Party
Money Damages
Damages are payment recovered in
court by a person who has suffered an
injury.
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Section 12.2 Remedies of the Injured Party
Money Damages
If you suffer a loss as the injured party,
you may sue for money damages
resulting from the breach of contract.
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Section 12.2 Remedies of the Injured Party
Money Damages
The money damages should, by law,
place you in the position you would
have been in if the contract had been
carried out.
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Section 12.2 Remedies of the Injured Party
Money Damages
To recover damages, the injured party
must make tender; that is, the injured
party must offer to do what he or she
agreed to do under the contract.
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Section 12.2 Remedies of the Injured Party
Money Damages
Categories of damages include:
Actual
Liquidated
Compensatory
Nominal
Consequential
Punitive
Incidental
Speculative
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Actual and Incidental Damages
Actual damages are damages
directly attributable to another party’s
breach of contract.
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Section 12.2 Remedies of the Injured Party
Actual and Incidental Damages
If a seller of goods breaches a
contract, the measure of damages for
the buyer is the difference between
the market price at the time of the
breach and the contract price, plus
incidental damages.
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Actual and Incidental Damages
Incidental damages are any
reasonable expenses, resulting from a
breach, that have been incurred by
the buyer.
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Section 12.2 Remedies of the Injured Party
Liquidated Damages
Damages agreed upon by the parties
when they first enter into a contract
are called liquidated damages.
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Section 12.2 Remedies of the Injured Party
Pre-Learning Question
How can a party minimize the
damages that result from a breach of
contract?
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Section 12.2 Remedies of the Injured Party
Minimizing Damages
The principle of mitigation of
damages states that even if you are
the innocent party, you must try to
minimize damages that might result
from the other party’s failure of
performance.
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Minimizing Damages
By minimizing damages, the innocent
party is protecting the other party from
any unnecessary losses.
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Section 12.2 Remedies of the Injured Party
Name two types of money damages.
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Section 12.2 Remedies of the Injured Party
ANSWER
Any two of the following: actual,
compensatory, consequential,
incidental, liquidated, nominal,
punitive, and speculative.
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Section 12.2 Remedies of the Injured Party
Pre-Learning Question
When do you think equitable remedies
are used?
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Section 12.2 Remedies of the Injured Party
Equitable Remedies
The remedy of money damages is not
always enough to repay an injured
party for breach of contract. In these
cases, the injured party may seek an
equitable remedy.
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Section 12.2 Remedies of the Injured Party
Equitable Remedies
Two equitable remedies are:
specific performance
an injunction
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Specific Performance
When the remedy of money damages
is not enough to repay a breach of
contract, one party may sue the other
for specific performance.
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Section 12.2 Remedies of the Injured Party
Specific Performance
Specific performance means asking
the court to order the other party to do
specifically what he or she originally
agreed to do.
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Section 12.2 Remedies of the Injured Party
Injunction
An injunction is a court order that
prevents a party from performing an
act of some sort.
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Section 12.2 Remedies of the Injured Party
Injunction
An injunction
is only available in special
circumstances, such as when
money damages are inadequate
compensation.
may be temporary or permanent
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Section 12.2 Remedies of the Injured Party
Ping contracted to deliver 200 gallons
of black berries to the Just Natural
Jams and Jellies company, and Just
Natural could only accept 100 gallons.
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Section 12.2 Remedies of the Injured Party
What is Ping obligated to do under the
mitigation of damages principle?
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ANSWER
Try to find another buyer for the
remainder of the black berries.
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Section 12.2 Assessment
Reviewing What You Learned
1. What is involved in an anticipatory
breach of a contract?
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Answer
One party to a contract notifies the other
party of his or her intention not to go along
with the terms of the contract.
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Reviewing What You Learned
2. What remedies are available to an
innocent party when a breach of
contract occurs?
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Answer
Money damages and equitable remedies.
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3. What is specific performance?
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Answer
It requires the other party to carry out the
terms of the contract as originally agreed.
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4. Why is it necessary to minimize the
damages involved in a breach of
contract?
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Answer
Answers may vary but should recognize
that minimizing damages protects the other
party from unnecessary losses.
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Section 12.2 Assessment
Critical Thinking Activity
Damages
What is the principle that forms the basis of
the theory of damages in contract law?
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Critical Thinking Activity Answer
Damages
Answers will vary but should recognize that
money damages should place you in the
position you would have been in if the
contract had been carried out.
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Section 12.2 Assessment
Legal Skills in Action
Anticipatory Breach
Harriet Iafigliano owes your friend, Andy,
$500 that she is supposed to pay him on
May 20. Harriet sent an e-mail to Andy in
April indicating that she could not pay him
on that date.
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Legal Skills in Action
Anticipatory Breach
Andy believes that the doctrine of
anticipatory breach applies in this situation.
Write a letter to Andy explaining whether
anticipatory breach applies in his case.
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Legal Skills in Action Answer
Anticipatory Breach
Letters will vary but should include that
because Harriet informed Andy in advance
of the agreed date that she was to pay him,
that she wouldn’t be able to pay him,
anticipatory breach does apply.
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End of Section 12.2
Remedies of the Injured Party