Certainty Flashcards
Chicago Coliseum Club v. Dempsey: facts
Chicago Coliseum Club (Coliseum) (plaintiff) entered into a contract with boxer Harry Wills, and subsequently, a separate contract with Jack Dempsey (defendant). The contracts stated that Wills and Dempsey would fight for the heavyweight championship sometime in September 1926. Under the contracts, Coliseum was to promote the fight. After the contracts were signed, Coliseum paid $10 to Dempsey and $300 to a stadium architect to design the layout of the ring. Subsequently, Coliseum entered into a third contract with Andrew Weisberg. Under the Weisberg contract, Weisberg was directed to help in the promotion of the fight, including securing accommodations for spectators and the arena. Weisberg was to incur the costs of this promotion and was to be reimbursed and paid from ticket sales from the fight. In July 1926, Coliseum sent Dempsey a letter asking him to submit to a pre-fight examination for insurance purposes. Dempsey responded that he was training for a different fight, against Gene Tunney, and that he would not be honoring the agreement with Coliseum. Coliseum brought suit in an Indiana court, seeking to enjoin Dempsey from fighting Tunney. The court granted the injunction. Coliseum also brought suit in an Illinois court for the following damages: (1) loss of profits; (2) expenses incurred prior to signing the agreement with Dempsey, meaning expenses incurred in signing the contract with Wills; (3) expenses incurred in attempting to stop Dempsey from fighting Tunney; and (4) expenses incurred after the Dempsey contract was signed, but before Dempsey’s breach.
Chicago Coliseum Club v. Dempsey: issue
In a breach of contract action, can the plaintiff recover on related expenses incurred before the contract was formed or after the contract was breached?
Chicago Coliseum Club v. Dempsey: holding
No. In an action for breach of contract, a party can recover only on damages which naturally flow from the breach and are reasonably foreseeable. Thus, in this case, (1) Coliseum may not recover for loss of profits that might have been obtained if the Dempsey-Wills fight had happened. There is no way to ascertain how many spectators would have shown up (2) Coliseum may not recover for expenses incurred prior to signing the agreement with Dempsey. (3) Coliseum may not recover for expenses incurred after Dempsey repudiated the contract. (4) Coliseum may recover for expenses incurred after the Dempsey contract was signed, but before Dempsey’s breach. However, this does not include expenses incurred by Weisberg because under the terms of his contract, he was to be reimbursed by profits from the fight, which did not come to fruition.
Chicago Coliseum Club v. Dempsey: rule of law
In an action for breach of contract, a party can recover only on damages which naturally flow from and are the result of breach.
Anglia Television Ltd. v. Reed: rule of law
A nonbreaching party may recover expenditures in lieu of lost profits, including those expenditures incurred both before and after the agreement was made.
Anglia Television Ltd. v. Reed: facts
Anglia Television Ltd. (Anglia) (plaintiff) contracted with Robert Reed (defendant) to star in a movie. Prior to entering into the contract, Anglia expended money on the film, including arranging for a place to film and employing a director, designer, and stage manager. Just before filming was to begin, Reed repudiated the contract due to a scheduling conflict. Anglia could not find a substitute actor and thus accepted Reed’s repudiation. Anglia subsequently brought an action against Reed. Liability was not disputed. Anglia could not establish what its profits would have been and, therefore, claimed for lost expenditures rather than lost profits. Reed argued that Anglia could not recover expenditures incurred before the parties entered into the contract. The master held that Anglia could recover all expenditures. Reed appealed to the Court of Appeal, Civil Division.
Anglia Television Ltd. v. Reed: issue
Can a nonbreaching party recover all of its lost expenditures in lieu of lost profits when the contract is breached?
Anglia Television Ltd. v. Reed: holding
Yes. A nonbreaching party can recover either lost profits or lost expenditures. If he chooses lost expenditures, he can recover those incurred both before and after the contract was made, so long as the expenditures can reasonably be expected to have been incurred and lost if the contract is breached. In this case, Reed reasonably should have expected that director’s fees and other similar fees had been expended at the time he entered into the contract and that these expenditures would be lost if he breached the contract. Accordingly, Anglia is entitled to recover for these lost expenditures in lieu of its lost profits. The master is affirmed, and the appeal is dismissed.
Mistletoe Express Service v. Locke: facts
Phyllis Locke (plaintiff) entered into a contract with Mistletoe Express Service (Mistletoe) (defendant) whereby she would provide pickup and delivery service. Locke expended money in order to perform under the contract, including purchasing two vehicles, building a ramp, dirt work, and other startup expenses. She took out a loan to cover some of these expenses. During the contract, Locke never made a profit, though she lost less each month. Thereafter, Mistletoe canceled the contract. Locke closed the business and sold the vehicles at a loss. She testified at trial that she could get some money for the ramp, but she considered the dirt work a total loss. She still owed on the loan and had paid some interest. The jury awarded Locke $19,400 in damages and judgment was entered in that amount, plus pre-judgment interest and $2,000 in attorney’s fees. Mistletoe appealed to the Court of Appeals of Texas.
Mistletoe Express Service v. Locke: rule of law
An innocent party may recover her lost expenditures, including any reasonable capital investment, but the recovery may be set off if the breaching party can prove that there would have been a loss.
Mistletoe Express Service v. Locke: facts
Phyllis Locke (plaintiff) entered into a contract with Mistletoe Express Service (Mistletoe) (defendant) whereby she would provide pickup and delivery service. Locke expended money in order to perform under the contract, including purchasing two vehicles, building a ramp, dirt work, and other startup expenses. She took out a loan to cover some of these expenses. During the contract, Locke never made a profit, though she lost less each month. Thereafter, Mistletoe canceled the contract. Locke closed the business and sold the vehicles at a loss. She testified at trial that she could get some money for the ramp, but she considered the dirt work a total loss. She still owed on the loan and had paid some interest. The jury awarded Locke $19,400 in damages and judgment was entered in that amount, plus pre-judgment interest and $2,000 in attorney’s fees. Mistletoe appealed to the Court of Appeals of Texas.
Mistletoe Express Service v. Locke: issue
Can an innocent party recover expenditures when the contract is breached?
Mistletoe Express Service v. Locke: holding
Yes. An award of damages should place a party in the position he would have been in had the contract been performed. Determining this award includes taking account of both missed opportunities and prevented losses.
