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Breach of Contract and Remedies

Incidental Damages

Expenses that are caused directly by a breach of contract (incurred to obtain performance from another source

Consequential Damages

Foreseeable damages that result from a party's breach of contract

Nominal Damages

When no actual damage or financial loss results from a breach of contract, and only a technical injury is invovled

Mitigation of Damages

The innocent, injured party is held to a duty to reduce the damages that they suffer


When rescinding a contract, each party must return the goods, property, or funds previously conveyed

Specific Performance

Performance of the act promised in the contract


Equitable remedy used when the parties have imperfectly expressed their agreement in writing, allows the court to rewrite the contract to reflect the parties true interactions


Right to require satisfactory and full performance

Punitive damages are recoverable in contract law for an intentional breach of contract.


Ray breaches his lease with Sunny Properties and vacates the premises six months before the end of the term. In some states, Sunny would have to

make reasonable efforts to relet the premises to mitigate damages.

Damages are designed to punish a breaching party and deter others from similar conduct.


A contract may include a clause stating that no damages can be recovered for a certain type of breach


Grady enters into a contract to buy 440 acres from Hollis to expand Grady's ranch. Hollis breaches the contract. Grady's normal remedy is

specific performance.

Development Associates (DA) agrees to buy five acres of land from Eastside Properties for $15,000. Eastside fails to go through with the deal on the agreed date, when the market price of the land is $17,000. DA may recover


SFX Paintball Games, Inc., and Truck & Trailer Delivery Corporation sign an agreement that provides for the payment of "$1,000 by whichever party commits a material breach of the contract that creates damages difficult to estimate but approximately $1,000." This is

a liquidated damages clause.

Clear Creek Corporation enters into a contract with Brightside Management Associates to manage and maintain Clear Creek's apartment complex. Their contract provides that neither party can recover damages for a non-fraudulent or unintentional breach. This is

a limitation-of-liability clause.

Fidelio Corporation enters into a contract with Equi Insurance, Inc., to obtain health insurance for Fidelio employees. Equi breaches the contract. If Fidelio is awarded compensatory damages, the purpose would be to

provide Fidelio with funds for its loss of the bargain.

Most parties settle their lawsuits for damages or other remedies prior to trial.


Vacation Vistas, Inc., agrees to sell certain acreage to Umiko, who intends to develop a destination resort. Vacation Vistas repudiates the deal. Umiko sues Vacation Vistas and recovers damages. She can now obtain

nothing more

Office Accounting, Inc., hires Perry to repair a computer on site for $400, but Perry does not show up as agreed. Office Accounting hires Raul to do the job for $350. Office Accounting may recover from Perry

nominal damages

Ordinarily, the remedy for a seller's breach of a contract for a sale of real estate is damages.


Consumer Credit Union pays Derby $10,000 to design an ad campaign. The next day, Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign. As compensatory damages, the credit union can recover


Refined Commodities, Inc., agrees to deliver ten tons of sheet metal to Select Builders Corporation. The agreement states that delivery is to be within "3" days, although the parties intend "30" days. Refined cannot convince Select to amend the contract. Refined should seek


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