February 3, 2025 • 8 mins
Welcome back to the Bar Exam Toolbox podcast! In this episode we're continuing to review the concepts from Contract Law we've covered in our "Listen and Learn" series.
In this episode, we discuss:
- Expectation and consequential damages
- Incidental, reliance, and restitution damages
- UCC expectation damages
- Third-party rights in contracts
Resources:
- Private Bar Exam Tutoring (https://barexamtoolbox.com/private-bar-exam-tutoring/)
- Hadley v. Baxendale (https://www.casebriefs.com/blog/law/contracts/contracts-keyed-to-farnsworth/remedies-for-breach/hadley-v-baxendale/)
- Podcast Episode 171: Listen and Learn – Expectation and Consequential Damages (Contracts) (https://barexamtoolbox.com/podcast-episode-171-listen-and-learn-expectation-and-consequential-damages-contracts/)
- Podcast Episode 295: Listen and Learn – Incidental, Reliance, and Restitution Damages (Contracts) (https://barexamtoolbox.com/podcast-episode-295-listen-and-learn-incidental-reliance-and-restitution-damages-contracts/)
- Podcast Episode 274: Listen and Learn – UCC Expectation Damages (Contracts) (https://barexamtoolbox.com/podcast-episode-274-listen-and-learn-ucc-expectation-damages-contracts/)
- Podcast Episode 296: Listen and Learn – Third-Party Rights in Contracts (Part 1 – Rules) (https://barexamtoolbox.com/podcast-episode-296-listen-and-learn-third-party-rights-in-contracts-part-1-rules/)
- Podcast Episode 297: Listen and Learn – Third-Party Rights in Contracts (Part 2 – Beneficiaries) (https://barexamtoolbox.com/podcast-episode-297-listen-and-learn-third-party-rights-in-contracts-part-2-beneficiaries/)
- Podcast Episode 293: Spotlight on Contracts (Part 1) (https://barexamtoolbox.com/podcast-episode-293-spotlight-on-contracts-part-1/)
Download the Transcript
(https://barexamtoolbox.com/episode-298-spotlight-on-contracts-part-2/)
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Lee Burgess (00:00):
Welcome to the Bar Exam Toolbox podcast.
Today, we are doing Part 2of our two-part substantive
spotlight series on Contract Law.
Your Bar Exam Toolbox hosts are AlisonMonahan and Lee Burgess, that's me.
We're here to demystify the barexam experience, so you can study
effectively, stay sane, and hopefullypass and move on with your life.
We're the co-creators of the Law SchoolToolbox, the Bar Exam Toolbox, and the
(00:21):
career-related website CareerDicta.
Alison also runs TheGirl's Guide to Law School.
If you enjoy the show, please leavea review on your favorite listening
app, and check out our sister podcast,the Law School Toolbox podcast.
If you have any questions, don'thesitate to reach out to us.
You can reach us via the contactform on BarExamToolbox.com,
and we'd love to hear from you.
And with that, let's get started.
(00:49):
Welcome back, contracts enthusiasts.
I'm Lee Burgess, and this is Part 2 ofour substantive spotlight on contracts.
Last time we talked about howcontracts are formed and performed.
Today, we're diving intoeveryone's favorite part - what
happens when things go wrong andwho gets to complain about it?
Grab your calculators, becausewe're about to talk damages.
(01:10):
Let's start with the big question.
When someone breaks acontract, what can you get?
Think of contract remedies like amenu at a very expensive restaurant.
You've got options, butthey all come at a price.
First up, expectation damages - thefilet mignon of contract remedies.
This is the classic "Put mewhere I would have been if
(01:32):
you'd kept your promise" remedy.
Let's make this real.
Say I promise to sell you mycar for $10,000, but then I sold
it to someone else for $12,000.
Your expectation damages would be thedifference between what you've had to
pay for a similar car now - let's say$13,000, and our agreed price of $10,000.
(01:53):
So, you'd get $3,000 - exactly whatyou need to get what you bargained for.
But what if this just isn't any car?
What if you needed it foryour delivery business?
Enter consequential damages - thetruffle fries of the damages world.
These are those extra losses thathappen because of the breach.
Let's say you lost $500 in businesswhile scrambling to find another vehicle.
(02:19):
Those lost profits might be recoverable,but - and this is a big "but" - only
if I knew you needed the car foryour business when we made the deal.
Remember that old case about the millshaft from your 1L year - Hadley v.
Baxendale?
Those mill owners couldn't recover theirlost profits, because the carrier didn't
(02:40):
know how crucial that mill shaft was.
It's like ordering food withoutmentioning your allergies - the
restaurant can't be responsiblefor what they couldn't foresee.
Now let's talk about incidental damages.
Think of these as your Uberride to another restaurant when
your reservation falls through.
These are the reasonable costs yourack up trying to deal with the breach.
(03:02):
In our car example, maybe youhad to rent a temporary vehicle
while looking for a replacement.
Those rental costs?
Incidental damages.
But wait, there's more!
Sometimes you don't want to beput where you would have been;
you just want your money back.
And that's where reliance damages come in.
These are like getting a refund forthe cooking class you signed up for,
(03:24):
because the chef never showed up.
You get back what you spentbelieving in those broken promises.
And for those "Let's pretendthis never happened moments",
we have restitution damages.
These prevent unjust enrichment,because no one should profit
from their broken promises.
It's like when your roommateeats your leftovers and you
(03:45):
make them buy you a new meal.
They don't just owe you forthe ingredients; they owe you
for the value of what they got.
Now, for all you commercial law fans outthere, the UCC has its own special set
of rules for buying and selling goods.
It's like damages with a business degree.
You've got (04:02):
cover damages - when you have to buy replacement goods
at a higher price; market pricedamages - when you don't actually buy
replacement goods, but could have; lostprofits for volume sellers, because
sometimes one sale just isn't enough.
Here's a practical example: Let's say you're a retailer who (04:18):
undefined
ordered 100 designer handbags at$100 each for the holiday season.
The supplier breaches and you haveto buy similar bags for $120 each.
Your cover damages would be $2,000- the $20 difference times 100 bags.
But what if you also lost customerswho wanted those specific bags?
(04:42):
That's where consequential damagesmight come in - if the supplier knew you
were buying for holiday retail sales.
Now, here's where thingsget really interesting.
Sometimes the person tryingto enforce the contract wasn't
even part of it originally.
Welcome to the worldof third-party rights.
It's like a contract party, whereunexpected guests keep showing up.
(05:04):
Let's break down our party guests.
We have assignees - folks who got invitedto the party after it started; delegatees
- people who got handed someone else'sparty responsibilities; and third-party
beneficiaries - the people who getparty favors without actually attending.
Take this scenario (05:22):
Developer contracts with Builder to construct a house,
then assigns the contract to Buyer.
Buyer is now the assignee and canenforce the contract against Builder.
But what if Builder delegates theactual construction to Subcontractor?
That's delegation, but Builder betterchoose wisely, because they might still
(05:43):
be on the hook if Subcontractor messes up.
And don't forget aboutthird-party beneficiaries.
Imagine a grandfather setting up a collegefund with a bank for his grandchild.
That grandchild - they're athird-party beneficiary who could
enforce the contract, even thoughthey never signed anything.
But remember they need to be anintended beneficiary, not just
(06:05):
someone who accidentally benefits.
It's like the difference betweenbeing invited to a wedding and
catching the bouquet - onlyone gives you actual rights.
Want to master all this law?
Here's your "Listen and Learn" playlist.
Start with "Listen and Learn- Expectation and Consequential
Damages" for the basics of recovery.
Move on to "Listen and Learn- Incidental, Reliance, and Restitution
(06:28):
Damages" for the full damages buffet.
Check out "Listen and Learn - UCCExpectation Damages" if
you're dealing with goods.
And finish with our two-part series on"Listen and Learn - Third-Party Rights"
to master assignments, delegations,and third-party beneficiaries.
And don't worry, we've linked to allthese episodes in the show notes.
(06:48):
When thinking about an exam and lookingfor facts to trigger law, keep some
of these best practices in mind:
1.
Always start with expectationdamages - it's the default remedy.
2.
Look for special circumstances thatmight lead to consequential damages.
3.
Don't forget about mitigation - no sittingaround watching the damages pile up!
(07:08):
4.
With third-party rights, always checkif the right and duty was transferable.
5.
Remember that some rights aretoo personal to assign - like
singing at someone's wedding.
Here's the bottom line (07:20):
Contract remedies are like a toolkit.
The more you understand what eachtool does, the better equipped
you are to fix the problem.
Any third party rights - they're likethe fine print that everyone should
read, but nobody does until it matters.
Until next time, this is LeeBurgess signing off from substantive
spotlight on contracts, whereevery broken promise has its price.
(07:43):
If you missed it, please check out Part1 of substantive spotlight, where we
focus on formation and performance.
If you enjoyed this episode of theBar Exam Toolbox podcast, please
take a second to leave a review andrating on your favorite listening app.
We'd really appreciate it.
And be sure to subscribeso you don't miss anything.
If you have any questions orcomments, please don't hesitate
(08:04):
to reach out to myself or Alisonat lee@bar examtoolbox.com
or alison@barexamtoolbox.com.
Or you can always contactus via our website contact
form at BarExamToolbox.com.
Thanks for listening, and we'll talk soon!
Welcome to the Bar Exam Toolbox podcast.
Today, we are doing Part 2of our two-part substantive
spotlight series on Contract Law.
Your Bar Exam Toolbox hosts are AlisonMonahan and Lee Burgess, that's me.
We're here to demystify the barexam experience, so you can study
effectively, stay sane, and hopefullypass and move on with your life.
We're the co-creators of the Law SchoolToolbox, the Bar Exam Toolbox, and the
(00:21):
career-related website CareerDicta.
Alison also runs TheGirl's Guide to Law School.
If you enjoy the show, please leavea review on your favorite listening
app, and check out our sister podcast,the Law School Toolbox podcast.
If you have any questions, don'thesitate to reach out to us.
You can reach us via the contactform on BarExamToolbox.com,
and we'd love to hear from you.
And with that, let's get started.
(00:49):
Welcome back, contracts enthusiasts.
I'm Lee Burgess, and this is Part 2 ofour substantive spotlight on contracts.
Last time we talked about howcontracts are formed and performed.
Today, we're diving intoeveryone's favorite part - what
happens when things go wrong andwho gets to complain about it?
Grab your calculators, becausewe're about to talk damages.
(01:10):
Let's start with the big question.
When someone breaks acontract, what can you get?
Think of contract remedies like amenu at a very expensive restaurant.
You've got options, butthey all come at a price.
First up, expectation damages - thefilet mignon of contract remedies.
This is the classic "Put mewhere I would have been if
(01:32):
you'd kept your promise" remedy.
Let's make this real.
Say I promise to sell you mycar for $10,000, but then I sold
it to someone else for $12,000.
Your expectation damages would be thedifference between what you've had to
pay for a similar car now - let's say$13,000, and our agreed price of $10,000.
(01:53):
So, you'd get $3,000 - exactly whatyou need to get what you bargained for.
But what if this just isn't any car?
What if you needed it foryour delivery business?
Enter consequential damages - thetruffle fries of the damages world.
These are those extra losses thathappen because of the breach.
Let's say you lost $500 in businesswhile scrambling to find another vehicle.
(02:19):
Those lost profits might be recoverable,but - and this is a big "but" - only
if I knew you needed the car foryour business when we made the deal.
Remember that old case about the millshaft from your 1L year - Hadley v.
Baxendale?
Those mill owners couldn't recover theirlost profits, because the carrier didn't
(02:40):
know how crucial that mill shaft was.
It's like ordering food withoutmentioning your allergies - the
restaurant can't be responsiblefor what they couldn't foresee.
Now let's talk about incidental damages.
Think of these as your Uberride to another restaurant when
your reservation falls through.
These are the reasonable costs yourack up trying to deal with the breach.
(03:02):
In our car example, maybe youhad to rent a temporary vehicle
while looking for a replacement.
Those rental costs?
Incidental damages.
But wait, there's more!
Sometimes you don't want to beput where you would have been;
you just want your money back.
And that's where reliance damages come in.
These are like getting a refund forthe cooking class you signed up for,
(03:24):
because the chef never showed up.
You get back what you spentbelieving in those broken promises.
And for those "Let's pretendthis never happened moments",
we have restitution damages.
These prevent unjust enrichment,because no one should profit
from their broken promises.
It's like when your roommateeats your leftovers and you
(03:45):
make them buy you a new meal.
They don't just owe you forthe ingredients; they owe you
for the value of what they got.
Now, for all you commercial law fans outthere, the UCC has its own special set
of rules for buying and selling goods.
It's like damages with a business degree.
You've got (04:02):
cover damages - when you have to buy replacement goods
at a higher price; market pricedamages - when you don't actually buy
replacement goods, but could have; lostprofits for volume sellers, because
sometimes one sale just isn't enough.
Here's a practical example: Let's say you're a retailer who (04:18):
undefined
ordered 100 designer handbags at$100 each for the holiday season.
The supplier breaches and you haveto buy similar bags for $120 each.
Your cover damages would be $2,000- the $20 difference times 100 bags.
But what if you also lost customerswho wanted those specific bags?
(04:42):
That's where consequential damagesmight come in - if the supplier knew you
were buying for holiday retail sales.
Now, here's where thingsget really interesting.
Sometimes the person tryingto enforce the contract wasn't
even part of it originally.
Welcome to the worldof third-party rights.
It's like a contract party, whereunexpected guests keep showing up.
(05:04):
Let's break down our party guests.
We have assignees - folks who got invitedto the party after it started; delegatees
- people who got handed someone else'sparty responsibilities; and third-party
beneficiaries - the people who getparty favors without actually attending.
Take this scenario (05:22):
Developer contracts with Builder to construct a house,
then assigns the contract to Buyer.
Buyer is now the assignee and canenforce the contract against Builder.
But what if Builder delegates theactual construction to Subcontractor?
That's delegation, but Builder betterchoose wisely, because they might still
(05:43):
be on the hook if Subcontractor messes up.
And don't forget aboutthird-party beneficiaries.
Imagine a grandfather setting up a collegefund with a bank for his grandchild.
That grandchild - they're athird-party beneficiary who could
enforce the contract, even thoughthey never signed anything.
But remember they need to be anintended beneficiary, not just
(06:05):
someone who accidentally benefits.
It's like the difference betweenbeing invited to a wedding and
catching the bouquet - onlyone gives you actual rights.
Want to master all this law?
Here's your "Listen and Learn" playlist.
Start with "Listen and Learn- Expectation and Consequential
Damages" for the basics of recovery.
Move on to "Listen and Learn- Incidental, Reliance, and Restitution
(06:28):
Damages" for the full damages buffet.
Check out "Listen and Learn - UCCExpectation Damages" if
you're dealing with goods.
And finish with our two-part series on"Listen and Learn - Third-Party Rights"
to master assignments, delegations,and third-party beneficiaries.
And don't worry, we've linked to allthese episodes in the show notes.
(06:48):
When thinking about an exam and lookingfor facts to trigger law, keep some
of these best practices in mind:
1.
Always start with expectationdamages - it's the default remedy.
2.
Look for special circumstances thatmight lead to consequential damages.
3.
Don't forget about mitigation - no sittingaround watching the damages pile up!
(07:08):
4.
With third-party rights, always checkif the right and duty was transferable.
5.
Remember that some rights aretoo personal to assign - like
singing at someone's wedding.
Here's the bottom line (07:20):
Contract remedies are like a toolkit.
The more you understand what eachtool does, the better equipped
you are to fix the problem.
Any third party rights - they're likethe fine print that everyone should
read, but nobody does until it matters.
Until next time, this is LeeBurgess signing off from substantive
spotlight on contracts, whereevery broken promise has its price.
(07:43):
If you missed it, please check out Part1 of substantive spotlight, where we
focus on formation and performance.
If you enjoyed this episode of theBar Exam Toolbox podcast, please
take a second to leave a review andrating on your favorite listening app.
We'd really appreciate it.
And be sure to subscribeso you don't miss anything.
If you have any questions orcomments, please don't hesitate
(08:04):
to reach out to myself or Alisonat lee@bar examtoolbox.com
or alison@barexamtoolbox.com.
Or you can always contactus via our website contact
form at BarExamToolbox.com.
Thanks for listening, and we'll talk soon!
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