Key Terms
Damages
Monetary remedy for breach.
Purpose
Prevent unjust enrichment after a contract has been legally annulled.
Rule
A final written contract cannot be modified by prior or contemporaneous oral negotiations. Courts look within the "four
Example
Insurance companies that refuse to honor legitimate disability claims in bad faith have been hit with punitive damages.
Incidental
Direct result of the breach itself. Consequential: indirect; resulting from the END RESULT of the breach.
Definition
Restoring property or benefits to the original owner. Parties must return any benefit received under the contract.
When it applies
When money damages are NOT adequate.
Classic examples
Real estate (always unique), artwork, antiques, heirlooms.
Requirements
The contract must be clear, definite, complete, and free from fraud and duress.
Timing rule
The party seeking rescission must notify the other party within a REASONABLE TIME after discovering the basis for rescis
Key limitation
Recovery is limited to the EXTENT the injured party actually conferred a benefit on the other party.
Breach
When a party fails to perform under contract terms without a legally justifiable reason.
Illegality
Contract is void; court won't enforce it or award remedies to someone intending to break the law.
Incapacity
Party lacked mental capacity (mental illness, intoxication, underage) to form a valid contract.
Undue influence
One party's free will was overborne by another's superior power. Contract may be voided.