Fundamentals of Business Law
Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.
ROGER LeROY MILLER
Institute for University Studies
Arlington, Texas
GAYLORD A. JENTZ
Herbert D. Kelleher Emeritus
Professor in Business Law
University of Texas at Austin
Learning Objectives
• What is the difference between compensatory and
consequential damages? What are nominal damages
and when do courts award them?
• What is the standard measure of compensatory
damages when a contract is breached? How are
damages computed differently in construction
contracts?
• Under what circumstances is the remedy of
rescission and restitution available?
• When do courts grant specific performance as a
remedy?
• What is the rationale underlying the doctrine of
election of remedies?
Copyright © 2010 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
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Types of Damages
• Compensatory Damages:
– Compensates injured party (Plaintiff).
– Plaintiff must prove actual damages
caused by breach. Amount:
• Generally: difference between Defendant’s
promised performance and actual.
• Sale of Goods: difference between the
contract price and market.
• Sale of Land/Construction Contracts.
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a part of South-Western Cengage Learning.
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Types of Damages
• Consequential (Special) Damages
– Foreseeable damages that result from breach
of contract.
– Caused by other than breach of contract.
• Punitive (Exemplary) Damages.
– Deter wrongdoer; set example.
• Nominal Damages.
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Types of Damages
• Mitigation of Damages.
– Injured party has a legal duty to mitigate
damages.
– CASE 12.1 Hanson v. Boeder (North
Dakota, 2007).
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Types of Damages
• Liquidated Damages vs. Penalties.
– Liquidated: fixed, certain dollar amount
agreed to by parties, paid in the event of
breach. LD’s are enforceable.
– Penalty: designed to penalize a party.
Generally not enforceable.
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a part of South-Western Cengage Learning.
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Equitable Remedies
• Rescission: cancel or undo a contract.
– Available for fraud, mistake, duress and
failure of consideration.
• Restitution: recapture the benefit
conferred on the defendant that has
unjustly enriched her.
– Parties must return goods, property or money.
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Equitable Remedies
• Specific Performance.
– Sale of Land. CASE 12.2 Stainbrook v.
Low (Indiana, 2006).
• Reformation: court re-writes the
contract to reflect parties’ true
intentions.
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a part of South-Western Cengage Learning.
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Recovery Based on
Quasi Contract
• Plaintiff must show:
– Benefit was conferred on the other party.
– Party conferring benefit expected to be
paid.
– Party seeking recovery did not volunteer.
– Retaining benefit without payment would
be unjust enrichment.
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a part of South-Western Cengage Learning.
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Remedies
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a part of South-Western Cengage Learning.
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Contract Provisions Limiting
Remedies
• Exculpatory Clauses or Limitations of
liability clauses.
• CASE 12.3 Lucier v. Williams (2004).
Copyright © 2010 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
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Election of Remedies
• Nonbreaching party usually has several
remedies available.
• Purpose is to prevent double recovery.
Copyright © 2010 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
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Fundamentals of Business Law
Summarized Cases, 8th Ed., and Excerpted Cases, 2nd Ed.
ROGER LeROY MILLER
Institute for University Studies
Arlington, Texas
GAYLORD A. JENTZ
Herbert D. Kelleher Emeritus
Professor in Business Law
University of Texas at Austin
Learning Objectives
• What are some important clauses to include
when making offers to form e-contracts?
• How do shrink wrap and click-on agreements
differ from other contracts? How have traditional
laws been applied to these agreements?
• What is an electronic signature? Are electronic
signatures valid?
• What is a partnering agreement? What purpose
does it serve?
• What is the UETA? What are some of the major
provisions of this act?
Copyright © 2010 South-Western Legal Studies in Business,
a part of South-Western Cengage Learning.
14
Forming Contracts Online
• Online Offers should include:
– Remedies for Buyer.
– Statute of Limitations.
– What constitutes Buyer’s acceptance.
– Method of Payment.
– Seller’s Refund and Return Policies.
– Disclaimers of Liability.
– How Seller will Use Buyer’s Information
(Privacy).
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a part of South-Western Cengage Learning.
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Forming Contracts Online
• Dispute Settlement Provisions.
– Choice of Law.
– Choice of Forum.
– E-Bay uses online dispute resolution.
• Displaying the Offer (via hyperlink).
– CASE 13.1 Feldman v. Google, Inc. (Pennsylvania,
2007).
• How Offer Will Be Accepted.
– Amazon.com--Checkout.
– “I Accept” Button to Click.
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a part of South-Western Cengage Learning.
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Online Acceptances
• Click-on Agreements.
– CASE 13.2 Mortgage Plus, Inc. v. DocMagic, Inc.
(Kansas, 2004).
• Shrink-Wrap Agreements.
– Contract terms are inside the box.
– Party opening box agrees to terms by keeping
merchandise.
• Enforceable Contract Terms. (UCC 2-204).
• Additional Terms.
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a part of South-Western Cengage Learning.
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Online Acceptances
• Click-On Agreements occur when
Buyer “checks out” or clicks on “I
Accept” button on Seller’s website or
when software is installed.
• Browse-Wrap Terms.
– CASE 13.3 Specht v. Netscape
Communications Company (2002).
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a part of South-Western Cengage Learning.
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E-Signatures
• E-Signature Technologies.
– Asymmetric Cryptosystem.
– Cyber Notary.
• State Law Governing E-Signatures.
– Uniform Electronic Transactions Act (1999).
• Federal Law.
– E-SIGN (2000) gives e-signatures and edocuments legal force.
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a part of South-Western Cengage Learning.
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Partnering Agreements
• Sellers and Buyers agree as to
protocols to create online agreements.
• Useful for electronic inventory (Just In
Time) ordering of parts and supplies.
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a part of South-Western Cengage Learning.
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UETA
• Purpose is to remove barriers to
forming electronic commerce.
• E-Signature is “electronic sound,
symbol or process…associated with a
record and… adopted by a person with
intent to sign the record.”
• UETA applies only to e-records and esignatures relating to a transaction.
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a part of South-Western Cengage Learning.
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UETA and Federal E-SIGN
• E-SIGN explicitly
refers to UETA.
• Provides that ESIGN is pre-empted
by state passing of
UETA.
• But state law must
conform to
minimum E-SIGN
procedures.
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a part of South-Western Cengage Learning.
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Highlights of UETA
• Parties must agree to Conduct Transactions
Electronically.
– A party can “opt out” of UETA terms.
• Attribution—process to ensure person sending
an electronic record is in fact the real person.
• Electronic Errors.
• Timing: “E-Mailbox” Rules.
– Dispatched when leaves control of sender.
– Received when enters recipient’s processing
system.
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a part of South-Western Cengage Learning.
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