Chapter 11 – Remedies

Alternative Dispute Resolution

• To settle a dispute other than by litigation, including arbitration and mediation

Litigation

• If the parties do have the right to go to court, it is common for the contract to include a statement about where the matter will be litigated and which state’s law will apply.

Legal Remedy

• Award of  money; also called damages
• In awarding a remedy in a case based on breach of contract, the court can look at three concerns
  • The parties’ expectations
  • What the parties did in reliance on the contract
  • What should be restored to the parties

Types of Damages

• Compensatory damages
• Expectation damages
• Incidental damages
• Consequential damages
• Special damages
• Reliance damages
• Liquidated damages
• Punitive damages
• Nominal damages

Equitable Remedies

• Courts have discretion with respect to equitable remedies
• They will not enter orders mandating specified actions is an award of damages would adequately compensate the third party
• Courts also avoid equitable remedies if parties outside the contract would have to be involved, if the injured party has delayed in a way that is unfair to the other party, if the remedy would cause unreasonable hardship, if the terms of the contract are unclear, or if the contract involves unfairness

Restoration and Replevin

• Restoration is the rewriting of a contract; called blue-penciling
• Replevin is recovery of property from one who is wrongfully in possession

Review Materials for Chapter 11

• Equitable Remedy – Award that is non-monetary and involves court orders; see Case in Equity and Chancery
• Parallel Litigation – Single dispute results in cases in more than one state or in both state and federal courts
• Consequential Damages – Losses that do not flow directly and immediately from an injurious act
• Laches – Injured party delays in seeking remedy in a way that is unfair to the other party
• Privity – Being a party to the contract
• Case at law – A case requesting damages (money)
• Nominal Damages – Minimal amount of damages awarded, even if no financial loss resulted from the breach or if the loss cannot be proven with reasonable certainty
• Replevin – Recovery of property from one who is wrongfully in possession
• Costs – Examples include filing fees, fees for service of process and similar charges incurred in litigation
• Incidental Damages – Losses reasonably associated with or related to actual damages; indirect damages
• Discovery – Pre-trial investigation of facts by questioning, inspection, etc.
• Election of Remedies – Injured party’s choice between remedies available for a single actionable occurrence
• Unique Property – An item that is not readily available from other sources
• Liquidated Damages – Damages agreed to in advance of breach, in the contract itself
• Strict Liability – Liability regardless of fault
• Neutral – A third party in ADR, mediator or arbitrator
• Cover – Buyer obtains substitute goods
• Alternative Dispute Resolution – To settle a dispute other than by litigation, including arbitration and mediation
• Fee Recovery – An award of attorney’s fees; also called Fee Reversal
• Specific Performance – Court order requiring a party to perform contract obligations
• Injunction – Court order requiring or prohibiting specific actions
• Court-annexed ADR – Use of the court system’s own mediators or arbitrators before going to trial
• Restitution – Return of, restoration of, or compensation for
• Choice of Law – Contract language that defines which state’s law will apply in case of litigation
• Reliance Damages – Damages awarded for losses incurred by plaintiff in reliance on the contract; puts party in position that would have been occupied if the contract had not been made
• Mediation – Neutral helps parties understand each others’ positions and may suggest solutions, but agreement ultimately comes from the parties
• Compensatory Damages – Damages intended to put non-breaching parties in the position they would have occupied if the contract had been fully performed
• Expectation Damages – Damages intended to put non-breaching parties in the position they would have occupied if the contract had been fully performed; Compensatory Damages
• Fee Reversal – An award of attorney’s fees; also called Fee Recovery
• Reformation – Rewriting contact; also called Blue-Penciling
• Present worth doctrine – The value, in “today’s money” of payments to be made in the future
• Notice of Claims Provision – Contract language requiring one party to give the other party written notice a specified time before filing suit
• Chancery – A chancery court can order acts performed
• Franchise – Contract granting the right to operate under a brand name
• Binding Arbitration – Parties give up the right to challenge arbitration result in court
• Special Damages – Losses that do not flow directly and immediately from an injurious act, but are indirect; see Consequential Damages
• Damages – Award of money; also called Legal Remedy
• Jurisdiction – Area within which judicial authority may be exercised
• Arbitration – A neutral hears both positions and imposes a decision
• Case in equity – Courts can issue orders based on fairness; see Equitable Remedy
• e-discovery – Electronic recovery of e-mail, and documents from computers, servers, and hand-held PDAs
• Legal Remedy – Award of money; also called Damages