HI Bar Remedies 1 — Questions and Answers
Question 1: What is the primary goal of compensatory damages in a contract breach case?
- To punish the breaching party
- To place the non-breaching party in the position they would have been in had the contract been performed (Correct answer)
- To restore the plaintiff to their pre-contract position
- To disgorge the defendant's profits
Correct answer: To place the non-breaching party in the position they would have been in had the contract been performed
Contract compensatory damages aim to protect the expectation interest by placing the non-breaching party in the position they would have occupied had the contract been fully performed.
Question 2: Under the doctrine of avoidable consequences, a plaintiff seeking damages must:
- Prove the defendant acted with malice
- Take reasonable steps to mitigate their losses (Correct answer)
- File a mitigation affidavit within 30 days of injury
- Obtain an injunction before pursuing damages
Correct answer: Take reasonable steps to mitigate their losses
The mitigation doctrine requires plaintiffs to take reasonable steps to minimize their losses; failure to do so bars recovery for losses that reasonably could have been avoided.
Question 3: Nominal damages are awarded when:
- Actual damages are difficult to calculate
- A legal right was violated but no actual monetary loss is proven (Correct answer)
- The defendant's conduct was willful
- The plaintiff seeks equitable relief in addition to money
Correct answer: A legal right was violated but no actual monetary loss is proven
Nominal damages (e.g., $1) are a token award recognizing that a legal right was technically violated even when the plaintiff cannot prove actual monetary harm.
Question 4: A liquidated damages clause in a contract is enforceable when:
- It is designed to penalize the breaching party
- Actual damages were difficult to estimate at contracting and the amount is a reasonable forecast of harm (Correct answer)
- The breaching party agrees to it at the time of breach
- It does not exceed actual damages by more than 10%
Correct answer: Actual damages were difficult to estimate at contracting and the amount is a reasonable forecast of harm
A liquidated damages clause is enforceable when damages were difficult to estimate at contracting and the stipulated amount represents a reasonable forecast of actual harm rather than a penalty.
Question 5: In Hawaii, punitive damages are available when the defendant's conduct was:
- Merely negligent
- Motivated solely by economic gain
- Willful, wanton, or oppressive (Correct answer)
- Resulting in physical injury only
Correct answer: Willful, wanton, or oppressive
Hawaii permits punitive damages when the defendant's conduct was willful, wanton, or oppressive, demonstrating a conscious disregard for the plaintiff's rights that goes beyond ordinary negligence.
Question 6: Which of the following is NOT recoverable as compensatory damages in a personal injury action?
- Medical expenses
- Lost wages
- Pain and suffering
- Defendant's profits derived from the tort (Correct answer)
Correct answer: Defendant's profits derived from the tort
Compensatory damages cover the plaintiff's actual losses (medical expenses, lost wages, pain and suffering); recovery of the defendant's profits is an equitable/restitutionary remedy, not compensatory damages.
Question 7: Under Hadley v. Baxendale, consequential damages in contract cases are limited to losses that:
- Exceed the total contract price
- Were foreseeable as a probable result of breach at the time of contracting (Correct answer)
- Were caused by the plaintiff's own failure to mitigate
- Arose only after full performance was rendered
Correct answer: Were foreseeable as a probable result of breach at the time of contracting
Hadley v. Baxendale limits consequential damages to those reasonably foreseeable as a probable consequence of breach at the time the contract was made, not at the time of breach.
HI Bar Remedies 1
What is the primary goal of compensatory damages in a contract breach case?