Contract Remedy Question -- Plz Help!

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camstant
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Contract Remedy Question -- Plz Help!

Postby camstant » Sat Dec 11, 2010 11:18 pm

P contracts with D for D to strip mine land conditional on P acquiring the land at an auction. D repudiates before the date of the auction. P, as a result, never goes to the auction to buy the land. What are P's damages/remedy, if any? So basically what happens when one party's performance is conditional on an uncertain event, but the other party repudiates before the condition even has a chance to occur or not?

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go4hls
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Re: Contract Remedy Question -- Plz Help!

Postby go4hls » Sat Dec 11, 2010 11:49 pm

1L here, but FWIW it looks like you have a straight breach of contract and P would get expectation damages.

Omerta
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Re: Contract Remedy Question -- Plz Help!

Postby Omerta » Sat Dec 11, 2010 11:55 pm

I don't see how there could be any damages. P never really relied (in a recoverable way) on D's actions. This would be like a general contractor soliciting a sub-contractor bid, then never submitting a general bid.

Maybe if P went anyways and won the land at auction, P may be able to recover the difference between the cover price and the K price. Those damages may be kept out as unjustifiable reliance since D already repudiated though. Interesting question.

Lupton Pittman
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Re: Contract Remedy Question -- Plz Help!

Postby Lupton Pittman » Sat Dec 11, 2010 11:55 pm

I'm a 1L too, so I'd definitely look this up, but I think I agree... In order to get any damages they'd have to be established with reasonable certainty, otherwise you get nothing.

Omerta
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Re: Contract Remedy Question -- Plz Help!

Postby Omerta » Sat Dec 11, 2010 11:56 pm

Omerta wrote:I don't see how there could be any damages. P never really relied (in a recoverable way) on D's actions. This would be like a general contractor soliciting a sub-contractor bid, then never submitting a general bid.

Maybe if P went anyways and won the land at auction, P may be able to recover the difference between the cover price and the K price. Those damages may be kept out as unjustifiable reliance since D already repudiated though. Interesting question.


go4hls wrote:1L here, but FWIW it looks like you have a straight breach of contract and P would get expectation damages.


What would the expectation damages be? Yeah, it's a breach of contract. It's still conditioned on P winning the auction which P never did. Profit from the operation assuming P wins? Way too speculative.

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Stanford4Me
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Re: Contract Remedy Question -- Plz Help!

Postby Stanford4Me » Sat Dec 11, 2010 11:57 pm

This seems like a modified agreement to agree. The problem I see is that what they're agreeing to agree on is so uncertain that courts would likely not find an enforceable agreement. P might be able to prove "bad faith" on the part of D, but then the question becomes what P can expect to receive in return, which would be expectation damages (I guess). The only problem with that is determining the certainty of P actually getting the land at auction (which is lacking), so I don't think there's a basis for any damages.

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go4hls
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Re: Contract Remedy Question -- Plz Help!

Postby go4hls » Sun Dec 12, 2010 12:00 am

Omerta wrote:
Omerta wrote:I don't see how there could be any damages. P never really relied (in a recoverable way) on D's actions. This would be like a general contractor soliciting a sub-contractor bid, then never submitting a general bid.

Maybe if P went anyways and won the land at auction, P may be able to recover the difference between the cover price and the K price. Those damages may be kept out as unjustifiable reliance since D already repudiated though. Interesting question.


go4hls wrote:1L here, but FWIW it looks like you have a straight breach of contract and P would get expectation damages.


What would the expectation damages be? Yeah, it's a breach of contract. It's still conditioned on P winning the auction which P never did. Profit from the operation assuming P wins? Way too speculative.


Yeah you're right about expectation damages being ruled out due to uncertainty. But there IS breach of contract though, so we all agree on that.

thwalls
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Re: Contract Remedy Question -- Plz Help!

Postby thwalls » Sun Dec 12, 2010 12:04 am

I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?

grash
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Re: Contract Remedy Question -- Plz Help!

Postby grash » Sun Dec 12, 2010 12:06 am

camstant wrote:P contracts with D for D to strip mine land conditional on P acquiring the land at an auction. D repudiates before the date of the auction. P, as a result, never goes to the auction to buy the land. What are P's damages/remedy, if any? So basically what happens when one party's performance is conditional on an uncertain event, but the other party repudiates before the condition even has a chance to occur or not?


there's only one instance in which i can see P getting expectation: D is the only party who can do the strip mining, and D is no longer physically capable of doing the strip mining. in that very unlikely scenario, P is justified in not buying the land at auction, because that would be piling up damages as a result of the breach. otherwise, P is obligated to go through with the auction and find another contractor to strip mine, and then sue D for the difference in cover price. in the general sense, if the other party repudiates before the condition occurs, it should be the same as any other contract - expectation damages where provable, but P has to keep acting in good faith to mitigate the damages.

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go4hls
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Re: Contract Remedy Question -- Plz Help!

Postby go4hls » Sun Dec 12, 2010 12:08 am

thwalls wrote:I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?


The solution was for the P to go to the auction and buy the item at the auction price. That way, the uncertainty would've been removed and he could've taken D out for all that punk has. I def don't like contract breachers (notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).

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GeePee
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Re: Contract Remedy Question -- Plz Help!

Postby GeePee » Sun Dec 12, 2010 12:11 am

go4hls wrote:
thwalls wrote:I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?


The solution was for the P to go to the auction and buy the item at the auction price. That way, the uncertainty would've been removed and he could've taken D out for all that punk has. I def don't like contract breachers (notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).

That's not a very good solution. The court would likely find that to be unreasonable reliance on the contract after the repudiation. If the buyer cannot then cover, he'd be screwed.

thwalls
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Re: Contract Remedy Question -- Plz Help!

Postby thwalls » Sun Dec 12, 2010 12:13 am

go4hls wrote:
thwalls wrote:I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?


The solution was for the P to go to the auction and buy the item at the auction price. That way, the uncertainty would've been removed and he could've taken D out for all that punk has. I def don't like contract breachers (notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).


I'm confused here. If he knew that D has repudiated the contract, and he then goes to the auction to buy the land, doesn't that mean that he's failed to mitigate his damages? Also, wouldn't D stating that he's not going to perform, without substantial performance of any kind constitute material breach? How does buying the land at auction do anything for P?

Don't hate on Posner bro, he's just rocking Coase theorem and Coase rocks the casbah.

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Ty Webb
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Re: Contract Remedy Question -- Plz Help!

Postby Ty Webb » Sun Dec 12, 2010 12:15 am

go4hls wrote:
thwalls wrote:I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?


The solution was for the P to go to the auction and buy the item at the auction price. That way, the uncertainty would've been removed and he could've taken D out for all that punk has. I def don't like contract breachers (notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).



Law students who feel qualified to run down superior minds = :?

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go4hls
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Re: Contract Remedy Question -- Plz Help!

Postby go4hls » Sun Dec 12, 2010 12:18 am

Ty Webb wrote:
go4hls wrote:
thwalls wrote:I'll jump in on this.

There's a breach of contract but there's no expectancy interest due to uncertainty. Moreover, I don't see how you could get to reliance since P hasn't done anything in preparation of performance.

I guess you could forego legal damages though and request specific performance of the contract, but I guess that would have depended on the auction having no occurred yet. If the auction did not occur I would request specific performance due to the inadequacy of legal damages. Since the auction has passed already I would say he might be SOL.

Also, sometimes you can have a breach and there be no loss.

Is there another auction to go to? Maybe a decent yard sale?


The solution was for the P to go to the auction and buy the item at the auction price. That way, the uncertainty would've been removed and he could've taken D out for all that punk has. I def don't like contract breachers (notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).



Law students who feel qualified to run down superior minds = :?


I'm just taking the position of my K's professor -- so take it up with him.

Army2Law
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Re: Contract Remedy Question -- Plz Help!

Postby Army2Law » Sun Dec 12, 2010 12:25 am

This is one of the rare situations where a duty to mitigate might be preempted by the need to make the purchase so that you can actually prove damages based on a conditional K. With no purchase, there are no damages, though. Also, without a purchase there's no breach, because the mining K was conditional on the purchase of the land.

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camstant
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Re: Contract Remedy Question -- Plz Help!

Postby camstant » Sun Dec 12, 2010 12:27 am

Ok, so say that P was to get a cut of all the coal that D was going to be mining out of the land. So now he's expecting to get paid for that...but i suppose there's still the major problem that it's just too uncertain that he would have even gotten the land at the auction. This would probably never happen because more than likely P would still go to the auction and hire someone else, which is what P should have done anyways so that there would have been some chance of getting damages. I think the hang-up is that we know D breached and it seems like P should get something for that, but there simply aren't any damages. D took a risk that P wouldn't get the land, and he got lucky that P is an idiot...

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go4hls
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Re: Contract Remedy Question -- Plz Help!

Postby go4hls » Sun Dec 12, 2010 12:30 am

Army2Law wrote:This is one of the rare situations where a duty to mitigate might be preempted by the need to make the purchase so that you can actually prove damages based on a conditional K. With no purchase, there are no damages, though. Also, without a purchase there's no breach, because the mining K was conditional on the purchase of the land.


There was breach b/c D repudiated. Repudiation = material breach. Fact that condition didn't happen is immaterial. The only question is the question of damages which appears to be 0 b/c of uncertainty due condition not happening prior to breach (this last part is the part that tripped me up).

Army2Law
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Re: Contract Remedy Question -- Plz Help!

Postby Army2Law » Sun Dec 12, 2010 12:40 am

I disagree that the K had even been formed at the time he repudiated, P had an option to either buy or not, and he never exercised the option that would have made the subsequent K. It depends on how you frame it.

Renzo
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Re: Contract Remedy Question -- Plz Help!

Postby Renzo » Sun Dec 12, 2010 12:47 am

go4hls wrote:notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).


:roll:

I'd love to hear your opinion on Posner's "amateur-hour" theory when you have one of these. (LinkRemoved)

Army2Law
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Re: Contract Remedy Question -- Plz Help!

Postby Army2Law » Sun Dec 12, 2010 12:48 am

Renzo wrote:
go4hls wrote:notwithstanding Posner and his "efficient" breach amateur-hour 2nd grade economics theorizing).


:roll:

I'd love to hear your opinion on Posner's "amateur-hour" theory when you have one of these. (LinkRemoved)

180

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JCougar
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Re: Contract Remedy Question -- Plz Help!

Postby JCougar » Sun Dec 12, 2010 1:22 am

This is a case of anticipatory repudiation, but expectation damages are far too uncertain to be enforced. It doesn't matter that P hasn't fulfilled the condition because D has made it pointless to fulfill it. But there's no way of calculating lost profit in this case.

P would probably be able to sue in reliance, however.

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Stanford4Me
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Re: Contract Remedy Question -- Plz Help!

Postby Stanford4Me » Sun Dec 12, 2010 1:32 am

JCougar wrote:This is a case of anticipatory repudiation, but expectation damages are far too uncertain to be enforced. It doesn't matter that P hasn't fulfilled the condition because D has made it pointless to fulfill it. But there's no way of calculating lost profit in this case.

P would probably be able to sue in reliance, however.

Doesn't that require that P took some action that was detrimental or caused a substantial change in position?

joshlyman
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Re: Contract Remedy Question -- Plz Help!

Postby joshlyman » Sun Dec 12, 2010 1:39 am

usually in these bid contract and sub bid situations (at least in our class)
you look at rest. 2d section 87 (2) which binds the sub contractor in situations
where the main contractor will rely on it to secure the main bid (the auction)
This usually protects contractors from this exact situation.
My guess is that the only damages they would get in a situation like this where
the actual main contract didnt go through would be any restitution damages (if you
find an injustice exists). Lack of a contract means expectation damages are donezo.

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JCougar
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Re: Contract Remedy Question -- Plz Help!

Postby JCougar » Sun Dec 12, 2010 2:30 am

Stanford4Me wrote:
JCougar wrote:This is a case of anticipatory repudiation, but expectation damages are far too uncertain to be enforced. It doesn't matter that P hasn't fulfilled the condition because D has made it pointless to fulfill it. But there's no way of calculating lost profit in this case.

P would probably be able to sue in reliance, however.

Doesn't that require that P took some action that was detrimental or caused a substantial change in position?


Yes...if the P didn't take any such action, he probably would have no recovery. But if he did things like spend money to find D to make the contract, clear the land for D, etc., he could recover. I'm trying to decide if he could recover if he turned down other offers to mine the land from D's competitors, but now the competitors have other plans. That would suffer from the same problems of uncertainty of damages...but it would be a loss in reliance.

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ninano
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Re: Contract Remedy Question -- Plz Help!

Postby ninano » Sun Dec 12, 2010 2:53 am

This case is similiar to Paul v. Rosen and James Baird Co v. Gimbel Bros contrasting with Obering v Swain Roach and Drennan v. Star paving Co. The court could go either way in whether the defendent is liable for damages

For D:If he gets the land the court would rule that the Doctrine of Avoidable Consequences kicked in and after breach, u can no longer rely on a contract meaning damages that accrue could have been avoided. If he was making expenditures to prep for the option that were reas foreseeable by both parties maybe the ct would award reliance damages

Also, one could argue that there was no mutuality of obligation at the inception of contract thus no enforceable agreement because the person who wanted the land could have not gone to the auction thus no contract (the strip mining saw the offer as If i feel like getting the K i'll call u-an illusory promise)

For P: the court can rule that the pers who wanted the land had an implied obligation to make reas efforts to get the land in the bid with his getting the land the condition precedent to the strip mining co to work/ there was mutuality of obligation (Strip mining saw the offer as proof that the other party would make efforts to get the land)

if the D's repudiation of the K b4 the condition occured and the party went through the land bid neway, I believe the strip miner would be liable for the diff. in price they would have paid the D and the price it has to pay for a new strip mining co. (BTW, I believe Cover-from the UCC- only applies when getting substitute goods, so the term should not be applied to service contracts)

they could have waited to sue D at the time the P was scheduled to perform instead of now and not going through with the K.

IF P does not purchase the land, they might be able to get wasted expenditures as in Anglia TV ltd v. Reed and will not get ne expectancy damages that they cannot prove w/o reas certainty




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