GENERAL PRINCIPLES OF LEGAL REMEDIES
[The following article was excerpted from John T. Blanchard's law school textbook,
California Remedies: Commentary, Materials and Problems (3d ed. ©1997)]
The customary remedy at law is an award of damages. Such awards are not,
however, the only legal remedy. Awards of money damages are obviously
substitutional rather than specific; that is, they substitute an award of
money for the loss suffered by the claimant rather than specifically enforcing
the offender's obligation. Often it is not possible to order specific
enforcement of a breached obligation (e.g., the duty of care toward other
persons which, when breached, results in personal injuries that cannot be
rendered nonexistent ab initio). Moreover, notwithstanding the fascination
of some academics with specific enforcement of all obligations, given
unavoidable delays between alleged breach and likely trial and other practical
difficulties, the equitable remedy of specific enforcement is limited to the
situations outlined in the article on Specific Performance.
"...the equitable remedy of specific enforcement is limited..."
The determination of whether an action is legal or equitable determines the nature of the relief available (substitutional, money damages, for cases at law and specific or preventive for cases in equity). It also determines other extremely important matters, among others, the right to a trial by jury. Jury trial is not available in actions in equity but is generally available in actions at law. It is beyond the scope of this text to consider the right to jury trial exhaustively. In particular, the often dramatic differences between California practice and federal practice as to entitlement to jury trial is beyond the scope of this article. However, two common misconceptions merit examination.
First, the categorization of "restitution" confuses many students, attorneys
and other legal scholars. Indeed, a common title of textbooks on this
subject is something akin to "Equity, Restitution and Damages". The title,
of course, seeks to finesse the categorization of "restitution" by implying
that it is sui generis. It is not. However, it is not possible to baldly
characterize "restitution" as either legal or equitable. That is because
the determination of whether it is legal or equitable depends on an election
of remedies by the plaintiff. A plaintiff may seek so-called "disgorgement"
of "unjust enrichment" by seeking the establishment of an involuntary trust;
that remedy is plainly equitable and, thus, a defendant is not entitled to a
jury trial on the question of whether an involuntary trust should be enforced
(or, for that matter, the other remedies considered in the preceding chapter).
However, a restitutionary measure of damages is often appropriate and, if
damages (regardless of the theory under which a plaintiff may seek to have
such damages measured) are sought the action is at law and, therefore, a
jury trial is available.
"A common title of textbooks on this subject is something
akin to 'Equity, Restitution and Damages.' The title, of
course, seeks to finesse the categorization of 'restitution'
by implying that it is sui generis. It is not."
Second, the remedy of "rescission" is commonly - and incorrectly - thought to be equitable. However, the California Supreme Court has held that it is a legal remedy because it generally seeks the return of money. Care must be taken here to not over-simply the Supreme Court's teachings. If the action has as its gravamen a declaration that a contract was rescinded and, thus, that no further performance by the plaintiff is to be required, then the action remains (as such claims were historically) an action in equity.
It is important to note that an award of damages should have not automatic, adverse moral connotation. In the context of contracts, particularly business contracts, such an award is merely the consequence of breach; the breach may have been the product of an intentional calculation by the breaching party that failure to perform (and, of course, suffer entry of an award of damages in favor of the other party) would be more economically advantageous than performance. Such a scenario is often presented in times of dramatic change in the market for the subject matter of the contract. In its most extreme form, a party to a contract may have to choose between performance that would likely result in financial ruination and default that would likely result in an adverse judgment for money damages. Except in special and unusual circumstances it is not the policy of the law to force parties to perform their contractual obligations; rather, it is the policy of the law to force such parties to accept the consequences of breach of contract. It is extremely important for those engaged in business to know the consequences of their actions. That is the primary reason for the nationwide review and codification of the principles of commercial law in the Uniform Commercial Code; and it remains an important consideration today as to both transactions in goods and other business subject matters (e.g., real estate).
"[I]t is not the policy of the law to compel adherence to contracts, but only to require each party to choose between performing in accordance with the contract and compensating the other party for injury resulting from a failure to perform. This view contains an important economic insight. In many cases it is uneconomical to induce the completion of the contract after it has been breached."
Posner, Economic Analysis of Law (1972) p. 55.