Contract Law & Commercial Transactions Flashcards

Expectation damages are designed to:

Answer: Put the plaintiff in the position they would have been in if the contract had been performed

Expectation damages give the non-breaching party the benefit of the bargain.

Under Hadley v. Baxendale, consequential damages are recoverable only if they:

Answer: Were reasonably foreseeable to the breaching party when the contract was made

Hadley limits consequential damages to losses that arise naturally from the breach or that both parties contemplated when contracting.

A liquidated damages clause is most likely to be enforced when:

Answer: Damages were hard to estimate at formation and the amount was a reasonable forecast

Courts enforce liquidated damages that reasonably forecast hard-to-estimate harm and strike them down as penalties when they do not.

An employer wrongfully fires an employee with 6 months left on a fixed-term contract. The employee turns down a substantially similar job in the same city. The employee's damages will be:

Answer: Reduced by what the employee could have earned in the comparable job

The duty to mitigate bars recovery for losses that could have been avoided by taking comparable substitute employment.

When do an intended third-party beneficiary's rights vest so that the original parties can no longer modify the contract without the beneficiary's consent?

Answer: When the beneficiary assents as requested, sues on the promise, or materially relies on it

Under Restatement §311, rights vest when the beneficiary manifests assent, sues, or materially changes position in reliance.

A contract says, "Neither party may assign this contract." Without more, courts generally read this clause as:

Answer: Barring only delegation of the assignor's duties, not assignment of rights

Under Restatement §322, a ban on assigning "the contract" is read as barring only delegation of performance unless the clause says otherwise.

A seller breaches a contract to sell a specific parcel of land. The buyer's best equitable remedy is:

Answer: Specific performance, because land is considered unique

Money damages are treated as inadequate for land, which is considered unique, so specific performance is routinely available.