Contract Remedy Question -- Plz Help!

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amonynous_ivdinidual
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Re: Contract Remedy Question -- Plz Help!

Postby amonynous_ivdinidual » Sun Dec 12, 2010 3:03 am

I'm not seeing much of an analogy to sub-contractor bidding.

Seems to me like a straight condition-precedent situation. That condition never occurred (P never purchased the land) so there's nothing to collect.

Had P bought the land, he wouldn't have upheld his duty to mitigate: • (§350 Rstmt) damages are not recoverable for loss that injured party could have avoided w/o undue risk, burden or humiliation.

Simplified analogous situation: "If I buy this particular classic used car, will you fix it up for me? Sure. Wait, I changed my mind. Ok, well I didn't buy the car but you still owe me for the value of fixing the car." Does that sound right?

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Lawquacious
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Re: Contract Remedy Question -- Plz Help!

Postby Lawquacious » Sun Dec 12, 2010 3:17 am

go4hls wrote: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).


^
I tend to think this is TCR (there definitely was an anticipatory breach through anticipatory repudiation in my reading- the hypo states there was a K made and that there was a repudiation. Unless there was a retraction of the repudiation prior to reliance on the repudiation by the injured party or notice of cancellation by injured party then repudiation= breach).

I think that how likely the said condition specified was to be met with reasonable effort could also go to the availability of a damages determination. If the K specification about meeting the condition prior to sale was a standard general statement related to this type of real estate sale in the place where it was to occur and under the circumstances it looked almost certain the condition could be met, then I think loss in value of the K could probably be calculated fairly easily with expectancy interest. If the condition really was a big "if", then I think certainty of the loss definitely would come into question. With a breach under a K (which this appears fairly clearly to me to be) it doesn't matter if there was actual reliance. However, if nothing was paid for the land under the K then the cost avoided would pretty much negate the loss in value of the K and damages would just be incidental and consequential damages as far as I can tell.

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Lawquacious
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Re: Contract Remedy Question -- Plz Help!

Postby Lawquacious » Sun Dec 12, 2010 3:21 am

amonynous_ivdinidual wrote:I'm not seeing much of an analogy to sub-contractor bidding.

Seems to me like a straight condition-precedent situation. That condition never occurred (P never purchased the land) so there's nothing to collect.

Had P bought the land, he wouldn't have upheld his duty to mitigate: • (§350 Rstmt) damages are not recoverable for loss that injured party could have avoided w/o undue risk, burden or humiliation.

Simplified analogous situation: "If I buy this particular classic used car, will you fix it up for me? Sure. Wait, I changed my mind. Ok, well I didn't buy the car but you still owe me for the value of fixing the car." Does that sound right?


^
Doesn't sound right to me- the condition was never allowed to occur in the hypo due to repudiation, rather than simply not occurring. Also, with your simplified hypo it sounds like there was negotiation that never matured into K instead of hypo for this thread where it was stated there was a K.

Also, failure of condition precedent in a K situation specifically allows for recovery under the K (if one of the party's actions was responsible in some way for the failure of the condition), rather than excusing recovery (or "collection." Though if the condition was innocently not met then I think it could be ground for cancellation of K without liability).

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ninano
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Re: Contract Remedy Question -- Plz Help!

Postby ninano » Sun Dec 12, 2010 7:47 am

Lawquacious wrote:
go4hls wrote: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).


^
I tend to think this is TCR (there definitely was an anticipatory breach through anticipatory repudiation in my reading- the hypo states there was a K made and that there was a repudiation. Unless there was a retraction of the repudiation prior to reliance on the repudiation by the injured party or notice of cancellation by injured party then repudiation= breach).

I think that how likely the said condition specified was to be met with reasonable effort could also go to the availability of a damages determination. If the K specification about meeting the condition prior to sale was a standard general statement related to this type of real estate sale in the place where it was to occur and under the circumstances it looked almost certain the condition could be met, then I think loss in value of the K could probably be calculated fairly easily with expectancy interest. If the condition really was a big "if", then I think certainty of the loss definitely would come into question. With a breach under a K (which this appears fairly clearly to me to be) it doesn't matter if there was actual reliance. However, if nothing was paid for the land under the K then the cost avoided would pretty much negate the loss in value of the K and damages would just be incidental and consequential damages as far as I can tell.


The subcontractor cases I used are factually similiar in that in both the subcontractor told the contractor that they want to withdraw their bid before the contractor submitted their bid, and the contractor submitted his bid anyway. In 1 case, the court said the doctrine of avoidable consequences applied and in the other they said that when a subcontractor submits his bid he has an implied obligation to follow through if that contractor is selected so he was liable for damages. in both cases, the contractor submitted his bid after anticipatory repudiation of the other party and was awarded the contract. with the above hypo, the condition precedent for either party to be obligated to each other did not occur, same in my analogous cases. I think a good answer would argue both sides and come down on 1 side in order to proceed through an exam response.

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camstant
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Re: Contract Remedy Question -- Plz Help!

Postby camstant » Sun Dec 12, 2010 11:31 am

ninano wrote:
Lawquacious wrote:
go4hls wrote: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).


^
I tend to think this is TCR (there definitely was an anticipatory breach through anticipatory repudiation in my reading- the hypo states there was a K made and that there was a repudiation. Unless there was a retraction of the repudiation prior to reliance on the repudiation by the injured party or notice of cancellation by injured party then repudiation= breach).

I think that how likely the said condition specified was to be met with reasonable effort could also go to the availability of a damages determination. If the K specification about meeting the condition prior to sale was a standard general statement related to this type of real estate sale in the place where it was to occur and under the circumstances it looked almost certain the condition could be met, then I think loss in value of the K could probably be calculated fairly easily with expectancy interest. If the condition really was a big "if", then I think certainty of the loss definitely would come into question. With a breach under a K (which this appears fairly clearly to me to be) it doesn't matter if there was actual reliance. However, if nothing was paid for the land under the K then the cost avoided would pretty much negate the loss in value of the K and damages would just be incidental and consequential damages as far as I can tell.


The subcontractor cases I used are factually similiar in that in both the subcontractor told the contractor that they want to withdraw their bid before the contractor submitted their bid, and the contractor submitted his bid anyway. In 1 case, the court said the doctrine of avoidable consequences applied and in the other they said that when a subcontractor submits his bid he has an implied obligation to follow through if that contractor is selected so he was liable for damages. in both cases, the contractor submitted his bid after anticipatory repudiation of the other party and was awarded the contract. with the above hypo, the condition precedent for either party to be obligated to each other did not occur, same in my analogous cases. I think a good answer would argue both sides and come down on 1 side in order to proceed through an exam response.


Subcontractor cases are different though in that there was reliance, so there was an easy way to measure any damages the GC would incur. But, yes, the hypo is from Paul v. Rosen, assuming the court decided how they would have today, what would the plaintiff's damages have been, and it seems they he would have none until P went to the auction (or got the loan in Paul v. Rosen)

schnoodle
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Re: Contract Remedy Question -- Plz Help!

Postby schnoodle » Sun Dec 12, 2010 8:36 pm

If you have Crunchtime Contracts, check #30 of the short answer questions. It may help illuminate the issues around the orig. hypo.

Omerta
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Re: Contract Remedy Question -- Plz Help!

Postby Omerta » Sun Dec 12, 2010 11:42 pm

ninano wrote:
The subcontractor cases I used are factually similiar in that in both the subcontractor told the contractor that they want to withdraw their bid before the contractor submitted their bid, and the contractor submitted his bid anyway. In 1 case, the court said the doctrine of avoidable consequences applied and in the other they said that when a subcontractor submits his bid he has an implied obligation to follow through if that contractor is selected so he was liable for damages. in both cases, the contractor submitted his bid after anticipatory repudiation of the other party and was awarded the contract. with the above hypo, the condition precedent for either party to be obligated to each other did not occur, same in my analogous cases. I think a good answer would argue both sides and come down on 1 side in order to proceed through an exam response.


The bolded part is wrong. Drennan and Gimbel were both cases where the Contractor's bid was submitted after receipt of the sub-contractors bid but before the award of the general bid. Both cases involve a sub-contractor repudiating before the bid was awarded. The repudiation in both cases occurred after the submission of the bid but before the general bid was awarded.

This case is more like a contractor making a deal with a sub-contractor, sub-c repudiates, then never submitting a general bid later and trying to claim damages. So in other words, it's nothing like the contracting cases. Huge factual difference

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savagedm
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Re: Contract Remedy Question -- Plz Help!

Postby savagedm » Mon Dec 13, 2010 12:16 am

GeePee 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).

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.


The real solution:

http://law.jrank.org/pages/4357/Anticipatory-Repudiation.html

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Sogui
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Re: Contract Remedy Question -- Plz Help!

Postby Sogui » Mon Dec 13, 2010 8:27 am

I skimmed the answers, simple example of breach seems right on the mark.

No you can't go to the auction anyway, that's unreasonable reliance, failure to mitigate, and 5 other principles that would get you laughed out of a courtroom.

You can argue damages but that's difficult too, sure there's out-of-pocket stuff, if any under reliance... but proving expectation isn't as "uncertain" as people here seem to think, I'd imagine if this were a real exam question the professor would expect some discussion of using the final auction price as the floor for costs and then adding the payout from the mining contract and residual land value to make a basic argument for expectation damages, it all depends on how "colored in" the details are... if the OP is stating all the facts available then you'd probably end up concluding that the damages would seem to be too speculative.

Keep in mind our markets are much more sophisticated today than the old-timey cases we read in the books, there's usually a pretty easy way to get evidence for the market value of anything in modern cases, as long as you aren't trying to get damages for your subjective valuation of an otherwise objectively-valued good/service, then expectation damages aren't that hard to "prove" in most cases.

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savagedm
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Re: Contract Remedy Question -- Plz Help!

Postby savagedm » Mon Dec 13, 2010 1:58 pm

Sogui wrote:I skimmed the answers, simple example of breach seems right on the mark.

No you can't go to the auction anyway, that's unreasonable reliance, failure to mitigate, and 5 other principles that would get you laughed out of a courtroom.

You can argue damages but that's difficult too, sure there's out-of-pocket stuff, if any under reliance... but proving expectation isn't as "uncertain" as people here seem to think, I'd imagine if this were a real exam question the professor would expect some discussion of using the final auction price as the floor for costs and then adding the payout from the mining contract and residual land value to make a basic argument for expectation damages, it all depends on how "colored in" the details are... if the OP is stating all the facts available then you'd probably end up concluding that the damages would seem to be too speculative.

Keep in mind our markets are much more sophisticated today than the old-timey cases we read in the books, there's usually a pretty easy way to get evidence for the market value of anything in modern cases, as long as you aren't trying to get damages for your subjective valuation of an otherwise objectively-valued good/service, then expectation damages aren't that hard to "prove" in most cases.


Well he can still go to auction if, and only if, that's his only reasonable means of acquiring the land and and he'd already relied to his own detriment on the promisee's word to get locked into doing something like that (or he'd invested significantly prior to the agreement to go into this anyways). Otherwise, yeah, no soup for him.

ogurty
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Re: Contract Remedy Question -- Plz Help!

Postby ogurty » Mon Dec 13, 2010 2:50 pm

Of course he can still go to auction!

I'm going to buy a house. Before I buy the house, I find & contract with a roofer, someone to install a pool, someone to redo the floors, and someone to build an addition. The roofer repudiates. Now I have to not buy the house?

I'm going to buy a grocery store. Before I buy the store, I hire a manager. Manager repudiates. Now I have to not buy the store? NO! I get cost of cover of another manager. It doesn't matter at all whether I substantially relied on the manager.

Even the Restatement section someone quoted agrees - duty to mitigate encompasses all actions the promisee could take without undue burden - the burden of foregoing the profit from the land purchase is undue.

Now MAYBE if D was giving P such a great price that it's impossible to find another laborer to stripmine the land profitably, then MAYBE buying the land is failing to mitigate, but that seems farfetched.

The harder question posed by the hypo is whether the failure of a condition precedent, post-repudiation, releases the duty of the repudiator. I'm inclined to say yes. We read Model Vending on this point, although that dealt with unforeseen supervening events. Here, the analysis might be similar - because the condition precedent was completely out of the control of D, it's hard to say he assumed the risk of nonoccurrence. But this can definitely go either way. If it goes P's way, then he gets cost of cover, plain and simple. Evidence of the market value of labor to stripmine that piece of land.




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