Introduction to Remedies in Contract Law

Key Topics Covered

• Theories of Recovery
• Types of Interests: Expectation, Reliance, Restitution
• Remedies for Contract Breaches
• Examples and Calculations

Theories of Recovery

1. Expectation Interest

   • Plaintiff desires the performance as promised
   • Goal: Put the plaintiff where they expected to be if the contract had been fulfilled
   • Remedies: Money damages or specific performance

2. Reliance Interest

   • Plaintiff wants to be reimbursed for expenses incurred due to reliance on the contract
   • Goal: Return the plaintiff to the position they were in before the contract
   • Remedies: Compensation for out-of-pocket expenses

3. Restitution Interest

   • Plaintiff seeks to recover benefits conferred to the defendant
   • Goal: Prevent the defendant from being unjustly enriched
   • Remedies: Monetary restitution or specific restitution

Purpose of Contract Remedies

• Compensate for losses, not to punish or reward
• A remedy can be based on more than one interest, though typically one is chosen

Calculating Damages

Expectation Damages

• Formula: Expected position - Actual position = Expectation damages
• Example: Painter's contract scenario
  • Contract price: $5,000
  • Cost: $4,500
  • Expectation gain: $500
  • Actual loss: $2,500
  • Total expectation damages = $3,000

Reliance Damages

• Focus on expenses incurred in reliance on the contract
• Example: Painter incurred $2,500 in costs
• Reliance damages = $2,500

Restitution Damages

• Based on value conferred to the defendant
• Example: Value of half-painted house = $3,000
• Restitution damages = $3,000

Special Considerations

Specific Performance

• Often used in cases involving real estate or unique goods
• Not always available; must prove inadequacy of money damages
• Terms must be certain, and performance feasible

Money Damages

• General, consequential, and incidental damages
• General Damages: Naturally flow from breach
• Consequential Damages: Arise from plaintiff’s special circumstances
• Incidental Damages: Costs incurred from mitigation efforts

Limitations on Damages

• Foreseeability: Damages must be foreseeable at the time of contract formation
• Certainty: Damages must be proved with certainty
• Causation: Must show breach caused the damages

Practice Problem Recap

• Various examples and scenarios were discussed
• Importance of understanding how to calculate and justify each type of damages

Conclusion

• Remedies are crucial in ensuring the non-breaching party is compensated adequately
• Different remedies serve different goals and are applied based on the specific circumstances of a breach

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• Note: Practice problems and examples are vital for mastering these concepts.
• Recommendation: Review each type of interest and associated remedy in detail.