Contracts As Risk Management
- 1. Contracts: There’s Risk?
- 2. Risk Management – Where’s the Risk Can you trust the person Financial miscalculation Contract is not performed
- 3. Whom do you Trust?
- 5. Covenants = Promises Performance Milestones Representations Warranty
- 6. What is a warranty? A warranty is a statement of fact
- 7. 2006 White Mustang, GC - $500
- 8. Warranty of Fitness for a Particular Purpose
- 9. White Mustang for Car Show
- 11. White Mustang for Normal Use
- 12. Default A party fails to perform an obligation under the contract
- 13. Remedies Nothing Damages Indemnity Defense Hold Harmless Injunctive Relief
- 14. Damages = Money
- 15. Types of Damages Actual Incidental Consequential Liquidated Punitive
- 16. Actual Damages Mustang as warranted = $20,000 Mustang as delivered = $15,000 Damages = $5,000
- 17. Incidental Cost to find replacement Cost of storage Broker’s costs Etc.
- 18. Consequential Seller must have reason to know consequential damages are likely Buyer’s failure to deliver Mustang causes its breach of other agreement and damages of $100,000
- 19. Liquidated Parties agree that damages may be hard to measure so agree ahead of time as to what they will be if there is a breach Must be reasonably related to damages that can be incurred Can’t be a penalty (unless you are the government)
- 20. Punitive Not going to happen
- 21. Disclaimer of Warranty Implied Warranties Anything other than express warranty Limitation of remedies Time Amount Repair or Replace AS IS
- 22. Limitation of Liability For any breach Time Amount of damages Types of damages
- 23. Indemnity Indemnity = reimburse Defend Hold Harmless
- 24. Manage Risk Warranties Disclaimer Limitation of Liability Indemnity