Contracts Outline

15–1. Liquidated Damages. Carnack contracts to sell his house and lot to Willard for $100,000. The terms of the contract call for Willard to make a deposit of 10 percent of the purchase price as a down payment. The terms further stipulate that if the buyer breaches the contract, Carnack will retain the deposit as liquidated damages. Willard makes the deposit, but because her expected financing of the $90,000 balance falls through, she breaches the contract. Two weeks later, Carnack sells the house and lot to Balkova for $105,000. Willard demands her $10,000 back, but Carnack refuses, claiming that Willard’s breach and the contract terms entitle him to keep the deposit. Discuss who is correct. (See Damages.)

1. According to the case, it shows that management of M determined that a loss would be “probable” and the estimate range would be $15 million to $20 million. However, they determined $17 million would be the “most likely” amount of loss.

The contractor, upon the breach of his obligations, he caused some damages to the owner and he should be exposed to forfeiture.

* The company decided to change from FIFO to LIFO inventory pricing, which resulted in a loss of $90,000 (net of tax).

The rule that courts will imply a term that was overlooked when the contract was being made, as it was so obvious

The mental anguish that he has had to go through and the pain and suffering that he has had to endure are also grounds for compensatory damages. Chapter 12 also covers punitive damages. These damages are fines that the court may impose on the company or individual in an effort them for the neglect. The company will undoubtedly be sued for negligence.

Purpose of contractual damages under english law is to protect the innocent party and put it in a position where it would have been if the contract had not been breached. In order to prove its damages a party must show that the law was reasonably foreseeable at time of completion of contract. Parties are supposed to have certain knowledge when they enter contract and such knowledge which reasonable person is assumed to know in the ordinary course of thing. Parties are taken to foresee loss which is not likely to happen because of breach of contract

In a contract, the parties may name a sum to be payable in the event of breach. If such sum is a genuine pre estimate of loss it is termed liquidated damages, and if it bears no reflection on the loss suffered, it is termed a penalty. Courts are reluctant to enforce penalty clauses and in such cases the sum stipulated is normally reduced. It has been perceptively observed by Fansworth that in comparison to the bargaining power which parties enjoy in negotiating their substantive contractual rights and duties, their power to bargain over their remedial rights is surprisingly limited. They are not at liberty to name an extravagant sum having no relation

Acorrdingly , it could be assumed that the courts did change their attitude towards a recovery for pure economic loss on the basis of a negligent misstatement as the Hedley Byrne v Heller case insinuated a recovery may be possible if the following criteria are met ; there is clear reliance by the plaintiff on the

Section 12(2) of the act defines a condition as “a stipulation essential to the main purpose of the contract, the breach of which gives rise to a right to treat the contract as repudiated.” Conditions is called an ‘express condition’ when a condition is expressed clearly in writing. A condition is a stipulation essential to the main purpose of the contract. It is very vital to the

The amount of the damages identified must not stipulate an amount that is greater than the actual that could have followed the breach.

A contracts with B to pay B Rs. 1,000 if he fails to pay B Rs. 500 on a given day. A fails to pay B Rs. 500 on that day. B is entitled to recover from A such compensation, not exceeding Rs. 1,000, as the court considers reasonable.”

A contract is a legally enforceable agreement between two or more parties with mutual obligations. The remedy at law for breach of contract is "damages" or monetary compensation. In equity, the remedy can be specific performance of the contract or an injunction. Both remedies award the damaged party the "benefit of the bargain" or expectation damages, which are greater than mere reliance damages, as in promissory estoppel.

b) Reliance is the detriment the injured party may have incurred by changing his or her position. (Rest.2d §349) Purpose of reliance damages is to restore the victim of breach to the position he or she would have been in if the contract had not been made. (Rest.2d §344(b) .)

Explanation –In estimating2 the loss or damage arising in the breach of the contract the means which are existed of remedying this inconvenience cause by the non performance of the contract must be taken into in an account