Remedies Outline

*****Tort Remedies*****

I. Tort Remediesa. Legal Remedies

i. Damages (defendant is ordered to pay money to the plaintiff)1. Compensatory Damages (based on the injury/harm to the plaintiff)

a. Put the injured party in the position he would have been in had the injury not occurred (make him whole)

b. Four Requirements for Recovery:i. Actual Causation

1. “But for” the defendant’s conduct, the injury would not have occurred

ii. Foreseeability (proximate causation)1. The injury must have been foreseeable by

the defendant at the time of the tortious actiii. Certainty

1. The damages cannot be too speculativea. Past losses must be established with

more certainty than future losses (e.g., past medical expenses must be proven with records/receipts; future medical expenses can be more speculative)

2. If there is a historical record, that can help to provide certainty (e.g., If defendant causes plaintiff’s restaurant to burn down, and the restaurant has been in business for three years, the historical record of the restaurant’s profits over the years can be used to determine what his lost profits will be for the next year while the building is being rebuilt)

3. For future damages (e.g., future lost income), the plaintiff must show that the damages are more likely to happen than not (“all or nothing rule”)

a. If the odds are more than 50/50, plaintiff can recover everything, but if the odds are less than 50/50, the plaintiff can recover nothing

iv. Unavoidability 1. Plaintiff must have taken reasonable steps to

mitigate damagesc. Personal Injury Torts (a particular problem area)

i. Certainty Rules1. Certainty rules apply with regard to

economic losses (special damages) (e.g., medical expenses, lost earnings).

2. Certainty rules do not apply to non-economic losses (general damages) (e.g., pain and suffering; permanent disfigurement). The jury may award any amount is wishes (subject to proper instructions)

ii. Form of Judgment Payment1. Award must be a single lump sum payment

(cannot be made in installments)2. Award must be discounted to present value3. Inflation is not taken into account (but there

is a modern trend to take this into account)2. Nominal Damages (awarded when the plaintiff has no actual

injury)a. Serve to establish or vindicate the plaintiff’s rights

i. Examples: Defendant regularly trespasses across the plaintiff’s property to get to the bus; Defamatory statements made against a plaintiff where there is no actual economic injury (doesn’t lose his job, etc.)

3. Punitive Damages (awarded to punish the defendant)a. Requirements:

i. Plaintiff must have first been awarded compensatory, nominal, or restitutionary damages

ii. Defendant’s fault must be greater than negligenceiii. Award must be for an amount relatively

proportionate to actual damages (some proportionality)

1. Rule of thumb: Punitives awarded should be no more than a single digit multiple of actual damages

b. Restitutionary Remedies (based on the concept that the defendant should not be “unjustly enriched”)

i. Legal Restitutionary Remedies1. Restitutionary Damages (based on the benefit to the defendant)

a. If both compensatory and restitutionary damages are available, plaintiff must elect one or the other (the one that will give him the greatest recovery)

i. Example: Plaintiff had a piece of vacant land containing a dirt road that the defendant’s trucks crossed everyday as a shortcut. Plaintiff isn’t really injured (nominal damages), but defendant benefited (less gas expended, less travel time, etc.).

ii. Example: Defendant steals plaintiff’s machine to use in its business. Plaintiff is injured (had to rent another machine or produced less) and entitled to compensatory damages. Defendant receives the benefit of using the machine without paying for it. Both compensatory and restitutionary damages are available, but plaintiff must choose one or the other. Plaintiff may also be able to get punitives.

b. Restitution is never available for encroachment (onto plaintiff’s land) or nuisance cases!

2. Replevin (to regain possession of personal property (chattels))a. Requirements:

i. Plaintiff has a right to possession; andii. Wrongful withholding by the defendant

b. Plaintiff can recover the chattel before the trial if:i. There is some preliminary judicial hearing (and

judge determines there is some colorable claim); and

ii. Plaintiff posts a bond (to ensure that a plaintiff not entitled to replevin can pay the defendant damages for his loss of the chattel during the trial)

c. Defendant can defeat immediate recovery by the plaintiff (before trial) if he posts a “redelivery bond” (defendant can then keep the chattel until after trial)

d. In a replevin action, the sheriff repossess the property for the plaintiff

e. Replevin is almost always coupled with damages (compensatory or restitutionary) for lost use or the benefit to the defendant during the time of wrongful detention

f. Plaintiff’s rights to replevin are cut off by the transfer of legal title to a bona fide purchaser for value

g. Note: Self-help may also be available (reasonable force can be used to recapture property)

3. Ejectment (to recover possession of real property)a. Requirements:

i. Plaintiff has a right to possession; ii. There is a wrongful withholding by the defendant;

andiii. Defendant has actual possession of the property

(isn’t just trespassing on it) (e.g., holdover tenant at the expiration of the lease)

b. Ejectment is almost always coupled with damages (compensatory or restitutionary) for lost use or the benefit to the defendant during the time of the wrongful withholding

c. Note: Self-help may also be available (reasonable force can be used to recapture property)

ii. Equitable Restitutionary Remedies (consider both together and determine which remedy plaintiff will ultimately choose)

1. Two Types:a. Constructive Trust (plaintiff should select if the property

value goes up in value subsequent to the taking)i. Requirements:

1. Defendant has improperly acquired title to property at the expense of the plaintiff (e.g., through fraud, undue influence, abuse of confidence, mistake, etc.);

2. Defendant’s retention of the property would result in unjust enrichment; and

3. Plaintiff has no adequate remedy at law (damages are inadequate)

a. Defendant is insolvent; orb. The property is unique

ii. Defendant is ordered to serve as a “trustee” and must return the property to the plaintiff

iii. Plaintiff becomes a secured creditor (entitled to recover the specific property constituting the trust res)

b. Equitable Lien (plaintiff should select if the property value goes down subsequent to the taking)

i. Requirements:1. Defendant wrongfully acquired title to

property at the expense of the plaintiff (e.g., through fraud, undue influence, abuse of confidence, mistake, etc.) or has improved property he already owns using money or property wrongfully obtained from the plaintiff

2. Defendant’s retention of the property would result in unjust enrichment; and

3. Plaintiff has no adequate remedy at law (damages are inadequate)

a. Defendant is insolventii. Property will be subject to an immediate court-

ordered sale1. The money recovered will go to the plaintiff2. If the proceeds of the sale are less than the

fair market value of the property when it was taken, a “deficiency judgment” will issue for the difference, and this can be used against the defendant’s other assets

a. However, to the extent a plaintiff has a deficiency judgment, the plaintiff will stand in line with other unsecured creditors

3. Plaintiff will have priority over unsecured creditors

2. Rules (for both types)a. Tracing is allowed (e.g., if defendant sells the property, you

can trace the profits)i. When the defendant’s property cannot be traced

back to only the plaintiff’s property (e.g., funds are commingled or defendant’s property was merely improved with the plaintiff’s property), only an equitable lien is available

1. Example: D misappropriates money from the plaintiff and uses it to remodel his house. Since title to the home was not obtained by use of the plaintiff’s money, the proper remedy is an equitable lien.

2. If withdrawals from a commingled bank account causes the balance to sink below the plaintiff’s claim, the lien is limited to the lowest account balance between the time of wrongdoing and the suit (“lowest intermediate balance”)

b. Bona fide purchasers prevail over the plaintiffc. Equitable Remedies

i. Injunctive Relief (where court orders defendant to do something or refrain from doing something)

1. Temporary Injunction (or Preliminary Injunction) (issued pending a trial on the merits)

a. Requirements:i. Notice (and an opportunity for defendant to argue

against it)ii. Irreparable Injury

1. If plaintiff had to wait for a full hearing on the merits, between now and then, he would suffer irreparable injury

2. A loss related to “unique” property (e.g., land, family heirloom, etc.) is regarded as an irreparable harm

iii. Plaintiff has a likelihood of success on the merits1. When the full hearing occurs, the odds are in

the plaintiff’s favor that an injunction will issue

iv. Hardships balance in the plaintiff’s favor (or the harm to the plaintiff is very severe/serious)

v. Plaintiff should be required to post a bond (to reimburse the defendant if the injunction injures him and the plaintiff does not succeed)

b. Temporary Restraining Order (TRO)i. Issued pending a hearing to determine whether a

temporary injunction should issue ii. Can be issued ex parte

1. Notice to defendant is not required (but a good faith effort to reach the defendant should be made)

2. An adversarial proceeding is not requirediii. Duration must not exceed 10 days (must have a

regular temporary injunction hearing by then)iv. All other requirements for temporary restraining

orders must be met2. Permanent Injunction (if there has been a full hearing on the

merits)a. When faced with a question asking if someone is entitled to

an injunction, you must first analyze whether the firm has a cause of action to begin with (for the tort), because an injunction will not issue unless the firm can demonstrate it is entitled to relief

b. Requirements: i. Notice to Opponent

ii. Inadequacy of Legal Remedies1. Examples: Damages (are too speculative;

defendant is insolvent; injury is only threatened; court wants to avoid a multiplicity of actions if parties have a prior history; plaintiff is trying to protect an interest in land, like relief against nuisance or trespass; loss involves “unique” property, like land or family heirlooms); Replevin (cannot locate chattel; defendant has destroyed it); and Ejectment (sheriff may refuse to act if encroachment onto plaintiff’s land is minor) would be inadequate

iii. A “Property Right” (or “protectable interest”)1. Traditional/Majority Rule

a. Equity will grant relief only where a protectable property right is involved (e.g., trademarks, reputation, etc.)

2. Modern Trend

a. A protectable interest will suffice (e.g., right to do business, etc.)

iv. Feasibility of Enforcement1. Negative Injunction (orders defendant to

stop doing something)a. No enforcement problem

2. Mandatory Injunction (orders defendant to affirmatively do something; perform an act)

a. There may be an enforcement problem based on:

i. The difficulty of supervision; or

ii. Concerns with effectively ensuring compliance

b. If the act involves the application of great taste, skill, or judgment:

i. Injunction will be denied (because we don’t know the defendant will perform the act with the requisite degree of taste, skill, or judgment necessary)

c. If the act involves a series of acts over a period of time:

i. Injunction will be denied, unless the plaintiff’s case is great (because it will be difficult to enforce and supervise all of the acts)

d. If an out-of-state act is required:i. Resident Defendant:

Injunction will be grantedii. Non-Resident Defendant:

Injunction will be deniedv. Hardships Balance in Plaintiff’s Favor (plaintiff’s

benefit vs. defendant’s hardship if injunction is granted)

1. For the defendant to avoid an injunction, there must be a gross disparity between detriment and benefit (if injunction issues, defendant will incur a lot more detriment than the benefit plaintiff will receive)

a. Even if defendant can show a gross disparity, there will be no balancing of the hardships (and injunction will

issue) if the defendant’s conduct was willful

2. If the court decides to balance the hardships (and defendant’s hardship will be great), the court should consider awarding the plaintiff money damages instead of issuing the injunction

3. Hardship to the public is also taken into account

a. Example: Company that is polluting the air has taken as many precautions as possible, but is still a nuisance to a neighboring house (plaintiff). If an injunction issued to prevent the company from operating, 500 employees would be laid off. The defendant’s hardship (leaving useless buildings, relocation costs, severance pay to laid off employees, etc.) and the public’s hardship (500 laid off workers, etc.) would lead the court to deny the injunction. Court would then consider awarding the plaintiff money.

vi. Defenses Are Overcome1. Unclean Hands (plaintiff was a “bad guy”

too and doesn’t deserve relief)a. Only available if the plaintiff’s

alleged improper conduct is related to the lawsuit

2. Laches (delay; “running of a period of time” defense) (e.g., plaintiff sits around and watches the defendant do something before he contests it)

a. Clock starts to run when the plaintiff knows of the injury

b. Delay cuts off the right of the plaintiff to get relief when it has been both unreasonable and prejudicial to the defendant

c. If laches does apply to prevent an injunction, the court will consider awarding the plaintiff money damages instead

3. Impossibility

a. Defendant claims it is impossible for him to carry out the terms of the injunction

4. Free Speecha. If the tort is defamation or a privacy

publication branch tort (false light, disclosure of private facts), the injunction will be denied on free speech grounds

3. Miscellaneous Injunctive Relief Issues a. Crimes

i. Equity will not enjoin crimes (however, almost all criminal acts can also be characterized as torts)

b. Who Will Be Bound By An Injunctioni. Parties (the defendant);

ii. Employees and agents acting with notice; andiii. Others acting “in concert” with notice

1. Example: M makes celebrity tee-shirts without the celebrities’ permission. A celebrity seeks an injunction and it is granted. Vendor at a stadium, who knew of the injunction, continued to buy the tee-shirts from M and continued to sell them. He is not an agent or employee, but he will be bound by the injunction

c. Erroneous Injunctionsi. If an erroneous (e.g., unconstitutional) injunction is

issued, one must still obey it (until it is modified or absolved)

d. Contempt (issued for disobeyance of a court order) i. Civil Contempt (to coerce defendant to comply with

the injunction)1. Money (fines) (court may also award

damages to the plaintiff in its discretion)2. Imprisonment

a. Defendant holds the keys to the jailhouse and will be released when he is ready to comply with the injunction

ii. Criminal Contempt (to punish the defendant)1. Fines (assessed and set)2. Imprisonment

a. Defendant cannot get out of jail earlier than the sentence set by the court

3. Constitutional safeguards apply

iii. There is no contempt (criminal or civil) for non-compliance with a money judgment

1. Exception: Defaults in alimony and child support payments

e. Injunctions are almost always coupled with damages for injuries incurred in the time period prior to obtaining the injunction

II. NOTE: Satisfactiona. If a plaintiff recovers full payment from one tortfeasor, either by settlement or

payment of a judgment, there is a “satisfaction” and she may not recover further against any other joint tortfeasors

i. However, until there is a satisfaction, she may proceed against other jointly liable parties

*****Contract Remedies*****

III. Legal Remediesa. Damages

i. Compensatory (based on the injury to the plaintiff)1. To make the party whole (as if the contract had been fully

performed)2. Requirements:

a. Causation (but for the defendant’s breach, the injury to the plaintiff would not have occurred)

b. Foreseeability (at time of contract formation)c. Certaintyd. Unavoidability (mitigation of damages)

ii. Consequential Damages 1. Available for related damages (those that don’t flow naturally

from the breach) that were foreseeable at the time of formationa. Example: Reputation Fact Pattern. A construction contract

between a company and a contractor provided for a certain quality of materials to be used. The contractor intentionally used substandard materials. Compensatory damages for either tearing the building down and rebuilding, or for a reduced sale value, are available. Also, the company had a lot of publicity about this construction project and the company’s reputation would take hit because it either wouldn’t sell it with top of the line materials or the project would be delayed. Company may be able to recover consequential damages for this because contractor knew about all of the publicity and the reputation of the company at contract formation.

iii. Nominal Damages1. Can be recovered (but in a commercial setting, no one would really

sue for them)

iv. Punitive Damages are not awarded in contract cases1. If the defendant’s conduct is willful, try to classify it as a tort too

b. Liquidated Damages Clausesi. If a contract has a valid liquidated damages clause, actual damages are not

available (liquidated damages are awarded in lieu of actual damages)ii. Requirements For a Valid Liquidated Damages Clause:

1. Damages were very difficult to ascertain at the time of contract formation; and

2. The amount of liquidated damages stated was a reasonable forecast/estimate of what actual damages would be

iii. If a liquidated damages clause allows the parties to select either liquidated damages or actual damages, it is invalid (cannot give parties a choice)

iv. If a liquidated damages clause is invalid, the parties may seek actual damages

IV. Restitutionary Remediesa. Legal Restitutionary Damages

i. Restitutionary Damages (quasi-contract remedies)1. Apply when a party renders some performance pursuant to a

contract and then the contract fails because it is unenforceable or it is breached

a. If Contract Fails Because It Is Unenforceable (e.g., through mistake, lack of capacity, statue of frauds, or illegality)

i. The plaintiff can get restitutionary damages for the property/money given to, or services rendered for, the defendant for the value of the benefit to the defendant

1. Even if the defendant did not actually use the benefit, he still must pay the value of the benefit

a. Example: Plaintiff sells store fixtures to the defendant for a new store pursuant to an unenforceable contract. Defendant will have to pay restitution, even if he decides not to open the store and repudiates the contract

ii. Plaintiff can recover restitutionary damages for more than the contract price

iii. If plaintiff has delivered property to the defendant, the plaintiff can get their property back if it is unique or if the defendant is insolvent

b. If Contract Fails Due to Breachi. Plaintiff is the Non-Breaching Party

1. Plaintiff can receive restitutionary damages for property/money given to, or services rendered for, the defendant for the value of

the benefit to the defendant (even if defendant did not actually use the benefit)

2. Recovery can be greater than the contract price

3. Plaintiff can receive their property back if it is unique or the defendant is insolvent

ii. Plaintiff is the Breaching Party (plaintiff partially performed under the contract and then breached)

1. Traditional/Majority Rule:a. Plaintiff cannot recover restitution

2. Modern Trend:a. Plaintiff can recover restitution, but:

i. Plaintiff cannot recover more than the contract amount; and

ii. Plaintiff’s recovery is reduced by any damages suffered by the defendant as a result of the plaintiff’s breach

ii. Repleviniii. Ejectment

b. Equitable Restitutionary Remediesi. Constructive Trust

ii. Equitable LienV. Equitable Remedies

a. Specific Performance (to force a party to perform the contract according to its terms)

i. Requirements:1. Contract Is Valid and Its Terms are Certain and Definite

a. Plaintiff must show the contract terms with more certainty and definiteness than what would be required in an action for money damages at law

2. Contract Conditions of the Plaintiff Are Satisfieda. Plaintiff must be able to show that his contract conditions

have been fulfilled (already performed, ready and able to be performed, or are excused from being performed)

b. The Only Two Bar Exam Fact Patterns (both involving land sale contracts)

i. Deficiencies Fact Pattern (seller cannot deliver the agreed upon consideration; e.g., structural damage to a house that has been contracted for purchase)

1. If Plaintiff Is the Sellera. Plaintiff can enforce the contract

through specific performance only if the defect is minor

b. Plaintiff cannot enforce the contract through specific performance if the

defect is major, unless the plaintiff/seller can cure the defect before closing

2. If Plaintiff Is the Buyera. Plaintiff/buyer can enforce the

contract through specific performance, even if the defect is major

b. Plaintiff/buyer cannot enforce the contract through specific performance if the defect is very major

3. If specific performance is granted, even though a defect still remains, the court will lower the purchase price (through “an abatement”) to take into account this defect in consideration.

ii. Time Is of the Essence Clause Fact Pattern 1. A land sale contract will contains an express

“time is of the essence clause” and a forfeiture provision stating that if performance is not timely rendered, all rights and obligations will cease to exist and all performance rendered to date shall be forfeited. After the buyer makes a late payment, the seller claims the contract and all prior payments made by the buyer are forfeited. Buyer will sue for specific performance.

2. “Equity abhors forfeitures,” so the court will try to avoid the harsh result of a forfeiture clause

a. Factors that will lead the court to avoid the forfeiture clause and award specific performance:

i. Loss to the seller is small;ii. The tardiness is de minimis;

iii. Waiver (seller has accepted late payments in the past); and/or

iv. Buyer would suffer undue hardship

3. Courts will almost always award specific performance in this fact pattern, but under the modern trend, courts will award the

plaintiff restitutionary relief if specific performance is not granted

4. This fact pattern relates to partially performed contracts. If the contract is wholly executory (i.e., buyer has done nothing yet), the time is of the essence clause will be strictly enforced

3. Legal Remedies Are Inadequatea. Damages can be inadequate because they are too

speculative, the defendant is insolvent, multiple suits between the parties are likely to occur, and/or the thing bargained for is “unique”

i. “Unique”1. Real property/land is “unique,” even if the

plaintiff could receive money damages, and even if the parcel looks ordinary/empty or identical to other lots

2. Personal property is not uniquea. Exceptions:

i. If the personal property is very rare or is one of a kind;

ii. If the personal property has personal significance to the buyer; or

iii. If circumstances have made the personal property unique (e.g., during a severe gas shortage, gasoline could be considered unique)

3. Uniqueness matters at the time of litigation, not at the time of contract formation (e.g., if gasoline was not unique at the time of contract formation, but is unique at trial, it is unique)

ii. Special “Seller’s” Rule1. Sellers of land can get specific performance

even though all they have coming to them is money (i.e., the purchase price)

b. A liquidated damages clause does not make money damages adequate (specific performance is still available), unless the clause provides that liquidated damages are to be the sole remedy

4. There Is Mutuality of Remedy or Performancea. Traditionally, a plaintiff could not be granted specific

performance unless she could demonstrate that the

defendant could have obtained such relief against her had she breached (mutuality of remedy)

i. Example: If the plaintiff to a contract lacks capacity (e.g., is under age 18 at contract formation) and brings an action against the defendant for specific performance, the defendant will argue that the plaintiff should not be able to enforce the contract against him because the defendant could not enforce it against the plaintiff (voidable by the plaintiff for lack of capacity).

b. Modernly, courts have replaced the mutuality of remedy requirement with mutuality of performance, and specific performance will be granted if both parties can and will perform

i. The specific performance decree will provide for simultaneous performance (e.g., deed and money are exchanged at the same time)

5. There Are No Available Defenses to Specific Performancea. Equitable Defenses

i. Unclean Handsii. Laches

iii. Unconscionability (at the time of contract formation)

1. More than simply a “bad deal.” Something in the way the contract was brought about must “smell” funny

iv. Mistakev. Misrepresentation

vi. Statute of Frauds1. If one party to an oral contract involving

land has rendered valuable part performance in reliance on the contract, this will take the case out of the statute of frauds and specific performance will be granted

a. “Valuable Part Performance”i. Any two of these three will

suffice: Payment (in whole or in part); Possession; and/or Valuable Improvements

ii. Modern trend says that valuable services will suffice

ii. Two Specific Performance Problem Areas1. Equitable Conversion (involving a land sale contract)

a. Once a land sale contract is specifically enforceable, an equitable conversion occurs and the property interests of the buyer and seller are regarded as switched (i.e., buyer is

regarded as having the real property interest, the specifically enforceable right to the land; the seller is regarded as having the personal property interest, the specifically enforceable right to the money)

b. Where Death or Destruction Occurs Between Contract Execution and Closing (assuming there was an equitable conversion)

i. Death of One of the Parties1. If the seller in a specifically enforceable

land sale contract dies before closing, the beneficiary who was to receive the land under the seller’s will shall receive nothing, and the purchase price will go to the devisee who is to take the testator’s personal property (or to the residuary)

ii. Damage/Destruction to the Property1. Risk of Loss

a. Majority Rule: The risk is on the buyer

i. Exception: If the loss is brought about by the seller’s negligence, risk of loss will be on the seller

b. Modern Trend: The risk is on the seller

i. Exception: If at the time of the loss the buyer has either legal title or possession, the risk will be on the buyer

2. Right to Insurance Proceedsa. Whoever has the risk of loss should

get any insurance proceeds (and if the buyer has the risk of loss and the insurance proceeds go to the seller, the buyer can get them using the constructive trust remedy)

2. Employment Contractsa. Employment contracts are not specifically enforceable (due

to enforcement problems and the public policy against involuntary servitude)

b. Negative Covenant Enforceability (when an employment contract contains a covenant not to compete)

i. An employer can, pursuant to a covenant not to compete, prevent the breaching employee from competing against the employer (or possibly from working for competitors), if the employer can show:

1. The covenant protects a legitimate interest of the person in whose favor it runs (i.e., the service is “unique”); and

2. The covenant is reasonable in both its geographical and durational scope

b. Equitable Rescission (court rescinds the contract through an order)i. Remedy whereby the original contract is considered voidable and

rescindedii. Requirements:

1. Proper Grounds for Rescission (all relate to contract formation)a. Mistake

i. Mutual Mistake (both parties were mistaken)1. If there is mutual mistake of a material fact,

rescission will be granteda. Example: A and B enter into a

contract for the sale of a warehouse building that they both mistakenly believe is in good condition, but in fact it has major structural damage. This is a material fact and rescission will be granted.

2. If there is mutual mistake of a collateral fact (one going to quality, desirability, or fitness of property for a particular purpose), rescission will be denied

ii. Unilateral Mistake (one party is mistaken)1. Rescission is generally denied

a. Traditional Exception: i. Where the non-mistaken

party knew of, or should have known, of the mistake

b. Modern Trend Exception: i. Rescission will be granted if

the mistaken party would suffer undue hardship without rescission

b. Misrepresentationi. In order to rely on the grounds of misrepresentation,

the plaintiff must show he properly relied on the misrepresentation

1. Innocent (or negligent) Misrepresentationsa. Requires reasonable reliance by the

plaintiff2. Intentional (fraudulent) Misrepresentations

a. Requires only actual reliance by the plaintiff

c. Coerciond. Undue Influencee. Lack of Capacityf. Failure of Considerationg. Illegality

2. There Is No Valid Defense to Rescissiona. Possible Defenses

i. Unclean Handsii. Laches

b. Negligence of the plaintiff is never a good defense iii. Three Specific Issues Dealing With Rescission

1. Election of Remediesa. If a plaintiff sues for damages first, rescission is not

allowed (regarded as an affirmance of the contract)b. If a plaintiff sues for rescission first, damages are also

allowedc. Plaintiff can sue for both at the same time, but must elect

the preferred remedy before judgment2. Availability of Restitution

a. If there has been some partial performance under the terms of the contract and the contract is going to be rescinded, restitution is also available

3. Legal Rescission (plaintiff accomplishes rescission through her own actions)

a. Plaintiff gives notice of rescission to the defendant and tenders back any consideration received

b. Plaintiff may then sue for restitution if defendant refuses to return something given to him by the plaintiff under the contract

c. Reformation (changes a written agreement to conform with the parties’ original understanding)

i. Requirements:1. Valid Contract2. Proper Grounds for Reformation

a. Mistakei. Mutual Mistake

1. Reformation will be grantedii. Unilateral Mistake

1. Reformation will be denied a. Exception: Where the non-mistaken

party actually knows about the mistake (regarded as fraud or inequitable conduct)

b. Misrepresentation

i. Reformation will be granted, and is available for both innocent and intentional misrepresentations (because rewriting reflects the expressed intent of the parties)

3. There Are No Valid Defenses Against Reformationa. Available Defenses

i. Unclean Handsii. Laches

b. Non-Defenses (defenses that will never work)i. Negligence of the plaintiff

ii. Statute of fraudsiii. Parol Evidence Rule

Basic Bar Exam Fact Patterns & Available Remedies

TORTSVI. Destroyed Property or Damaged Property (including encroachment/nuisance)

a. Compensatory DamagesVII. Dispossession of Personal Property

a. Compensatory Damages; Restitutionary Damages (if defendant benefits); Replevin; Mandatory Injunction (if chattel is unique and damages/replevin won’t work); Constructive Trusts/Equitable Liens (particularly if defendant is insolvent and/or tracing is involved); Self-Help (reasonable force to recapture);

VIII. Simple Trespassa. Nominal Damages; Injunction (to avoid multiplicity of actions)

IX. Destruction/Damage of Realty a. Compensatory Damages; Injunction

X. Dispossession of Real Propertya. Compensatory Damages; Restitutionary Damages; Ejectment (since this is

available, no injunction is available)XI. Encroachment

a. Compensatory Damages; Injunction; No Restitution XII. Nuisance

a. Compensatory Damages; Injunction; No RestitutionXIII. Personal Injury Torts

a. Compensatory Damages; Injunction (only against prospective intentional tortious conduct)

XIV. Frauda. Damages; Constructive Trust/Equitable Lien

XV. Note: Always consider if the tort claim should also be analyzed as a contract case and whether punitive damages should be awarded (if conduct is really wrongful and egregious)

CONTRACTSXVI. Personal Property Sale Contracts

a. Compensatory Damages (for seller’s breach; for buyer’s breach)b. Restitution (especially in unenforceable/breached contracts)c. Specific Performance (property is not unique though, except for certain

exceptions)d. Rescissione. Reformation

XVII. Real Property Sale Contractsa. Compensatory Damages (for seller’s breach; for buyer’s breach)b. Restitution (especially in unenforceable/breached contracts)c. Specific Performance (land is unique; both buyer and seller can get specific

performance; remember deficiencies/time of the essence clauses and equitable conversion)

i. Rescissionii. Reformation

d. Construction Contractsi. Compensatory Damages (for owner’s breach; for builder’s breach)

ii. Restitution (typically only available for the builder for work already done, unless the seller pre-paid)

iii. Specific Performance (typically only for the owner, but very difficult due to enforcement problems)

e. Personal Services Contractsi. Compensatory Damages (for employer’s breach; for employee’s breach)

ii. Restitution (typically only for the employee for services rendered, unless employer pre-paid)

iii. Specific Performance (not available in an employment contract; available for a valid covenant not to compete)