Chapter 16. Remedies (344-385)

Question 1

A contracts to build a building for B on B’s land for $100,000. B repudiates the contract before either party has done anything in reliance on it. It would have cost A $90,000 to build the building. What interest, if any, does A have against B?

Answer 1

A has an expectation interest of $10,000, the difference between the $100,000 price and his savings of $90,000 in not having to do the work. Since A has done nothing in reliance, A’s reliance interest is zero. Since A has conferred no benefit on B, A’s restitution interest is zero. Restatement 2d of Contracts § 344(a)

Question 2

A contracts to build a building for B on B’s land for $100,000. B repudiates the contract after A has spent $60,000 of the $90,000 that it would have cost A to build the building. A has been paid nothing and can salvage nothing from the $60,000 that he has spent. What interest, if any, does A have?

Answer 2

A now has an expectation interest of $70,000, the difference between the $100,000 price and his saving of $30,000 in not having to do the work. A also has a reliance interest of $60,000, the amount that he has spent. If the benefit to B of the partly finished building is $40,000, A has a restitution interest of $40,000. Restatement 2d of Contracts § 344(b)

Question 3

A, who is about to produce a play, makes a contract with B, an actor, under which B is to play the lead in the play at a stated salary for the season. A breaks the contract and has the part played by another actor. What interest, if any, does B have against A?

Answer 3

B’s expectation interest includes the extent to which B’s reputation would have been enhanced if he had been allowed to play the lead in A’s play, as well as B’s loss in salary, both subject to the limitations stated in Topic 2 of § 344. Restatement 2d of Contracts § 344(b)

Question 4

A contracts to construct a monument in B’s yard for $10,000 but abandons the work after the foundation has been laid. It will cost B $6,000 to have another contractor complete the work. The monument planned is so ugly that it would decrease the market price of the house. What interest, if any, may B have?

Answer 4

Nevertheless, B’s expectation interest is the value of the monument to him, which, under the rule stated in § 348(2)(b), would be measured by the cost of completion, $6,000. Restatement 2d of Contracts § 344(b)

Question 5

A makes a contract with B under which A is to pay B for drilling an oil well on B’s land, adjacent to that of A, for development and exploration purposes. Both A and B believe that the well will be productive and will substantially enhance the value of A’s land in an amount that they estimate to be $1,000,000. Before A has paid anything, B breaks the contract by refusing to drill the well. Other exploration then proves that there is no oil in the region. What expectation interest, if any, does A have?

Answer 5

A’s expectation interest is zero. Restatement 2d of Contracts § 344(b)

Question 6

A gives B a “dealer franchise” to sell A’s products in a stated area for one year. In preparation for performance, B spends money on advertising, hiring sales personnel, and acquiring premises that cannot be used for other purposes. A then repudiates before performance begins. If B takes action against A, what––if anything––can B recover?

Answer 6

If neither party proves with reasonable certainty what profit or loss B would have made if the contract had been performed, B can recover as damages his expenditures in preparation for performance. See Illustration 8 to § 90. Restatement 2d of Contracts § 349(a)

Question 7

A contracts with B to stage a series of performances in B’s theater, each to have 50 per cent of the gross receipts. After A has spent $20,000 in getting ready for the performances, B rents the theater to others and repudiates the contract, and A stages the performance at another theater. A’s expenditures in preparation for performance of the contract with B are worth $8,000 to him in connection with staging the performances at the other theater.If A takes action against B, what––if anything––can A recover?

Answer 7

If neither party proves with reasonable certainty what profit or loss A would have made if the contract had been performed, A can recover as damages the $12,000 balance of his expenditures in preparation for performance. Restatement 2d of Contracts § 349(a)

Question 8

A contracts to build for B a factory of experimental design for $1,000,000. After A has spent $250,000 and been paid $150,000 in progress payments, B repudiates the contract and A stops work. A’s expenditures include materials worth $10,000 that he can use on other jobs. If A takes action against B, what––if anything––can A recover?

Answer 8

If neither party proves with reasonable certainty what profit or loss A would have made if the contract had been performed, A can recover as damages the $90,000 balance of his expenditures in preparation for performance. Restatement 2d of Contracts § 349(a)

Question 9

A contracts to sell his retail store to B. After B has spent $100,000 for inventory, A repudiates the contract and B sells the inventory for $60,000. If B takes action against A, what––if anything––can B recover?

Answer 9

If neither party proves with reasonable certainty what profit or loss B would have made if the contract had been performed, B can recover as damages the $40,000 loss that he sustained on the sale of the inventory. Restatement 2d of Contracts § 349(a)

Question 10

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000. The contract provides that on default by B, A has the right to retain any installments paid by B. Is the provision valid? What restitution, if anything, can B recover?

Answer 10

The provision is not valid, and B can still recover $30,000 from A in restitution less $5,000 damages for B’s breach of contract, or $25,000. Restatement 2d of Contracts § 374(c)

Question 11

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000. The contract provides that on default by B, A has the right to retain the first $10,000 installment paid by B. What restitution, if anything, can B recover?

Answer 11

If $10,000 is a reasonable amount, B can recover only $20,000 from A in restitution. Restatement 2d of Contracts § 374(c)

Question 12

A contracts to tutor B’s son for six months in preparation for an examination, in return for which B promises to pay A $2,000 at the end of that time. After A has worked for three months, he leaves to take another job and B is unable to find a suitable replacement. What restitution, if anything, can B recover?

Answer 12

In the absence of any reliable basis for measuring the benefit to B from A’s part performance, restitution will be denied. Restatement 2d of Contracts § 374(b)

Question 13

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. A makes repairs costing him $8,000 but inadvertently fails to follow the specifications in such material respects that there is no substantial performance. See Comment d to § 237. The defects do not require destruction of large parts of the building and can be corrected for $4,000, which will confer a benefit on B by increasing the value of the building to him by a total of $9,000. What restitution, if anything, can A recover?

Answer 13

A can recover $5,000 from B in restitution. Restatement 2d of Contracts § 374(b)

Question 14

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. A makes repairs costing him $8,000 but inadvertently fails to follow the specifications in such material respects that there is no substantial performance. See Comment d to § 237. The defects cannot be corrected without the destruction of large parts of the building, but the work confers a benefit on B by increasing the value of the building to him by $4,000. What restitution, if anything, can A recover?

Answer 14

A can recover $4,000 from B in restitution. Restatement 2d of Contracts § 374(b)

Question 15

A contracts to make repairs to B’s building in return for B’s promise to pay $10,000 on completion of the work. After spending $8,000 on the job, A fails to complete it because of insolvency. B has the work completed by another builder for $4,000, increasing the value of the building to him by a total of $9,000, but he loses $500 in rent because of the delay. What restitution, if anything, can A recover?

Answer 15

A can recover $5,000 from B in restitution less $500 in damages for the loss caused by the breach, or $4,500. Restatement 2d of Contracts § 374(b)

Question 16

A contracts to sell land to B for $100,000, which B promises to pay in $10,000 installments before transfer of title. After B has paid $30,000 he fails to pay the remaining installments and A sells the land to another buyer for $95,000. What restitution, if anything, can B recover?

Answer 16

B can recover $30,000 from A in restitution less $5,000 damages for B’s breach of contract, or $25,000. If A does not sell the land to another buyer and obtains a decree of specific performance against B, B has no right to restitution. Restatement 2d of Contracts § 374(b)

Question 17

A contracts to build a bridge for B for $100,000. B repudiates the contract shortly after A has begun work on the bridge, telling A that he no longer has need for it. A nevertheless spends an additional $10,000 in continuing to perform. What restitution, if anything, can A recover?

Answer 17

A’s restitution interest under the rule stated in § 370 does not include the benefit conferred on B by the $10,000. See Illustration 1 to § 350. Restatement 2d of Contracts § 373(e)

Question 18

A contracts to work as a consultant for B for a fee of $50,000, payable at the end of the year. B wrongfully discharges A at the end of eleven months. What restitution, if anything, can A recover?

Answer 18

A can recover in restitution based on the reasonable value of his services. The terms of the contract are evidence of this value but are not conclusive. Restatement 2d of Contracts § 373(d)

Question 19

A contracts to build a house for B for $100,000. After A has spent $40,000, B discovers that he does not have good title to the land on which the house is to be built. B repudiates the contract and abandons the project. A’s work results in no actual benefit to B. What restitution, if anything, can A recover?

Answer 19

A cannot recover in restitution from B, but under the rule stated in § 349 he can recover as damages the $40,000 that he has spent unless B proves with reasonable certainty that A would have sustained a net loss if the contract had been performed. See Illustration 4 to § 349. Restatement 2d of Contracts § 373(d)

Question 20

A, a plumbing subcontractor, contracts with B, a general contractor, to install the plumbing in a factory being built by B for C. B promises to pay A $100,000. After A has spent $40,000, B repudiates the contract and has the plumbing finished by another subcontractor at a cost of $80,000. The market price to have a similar plumbing subcontractor do the work done by A is $40,000. What restitution, if anything, can A recover?

Answer 20

A can recover the $40,000 from B in restitution. Restatement 2d of Contracts § 373(d)

Question 21

A contracts to build a house for B for $50,000, progress payments to be made monthly in an amount equal to 85% of the price of the work performed during the preceding month, the balance to be paid on the architect’s certificate of satisfactory completion of the house. B makes the first three payments and then repudiates the contract and has another builder finish the house. What restitution, if anything, can A recover?

Answer 21

A can recover in restitution for the reasonable value of his work, labor and materials, less the amount of the three payments. The performance during each month and the corresponding progress payments are not agreed equivalents under the rule stated in § 240. See Illustration 7 to § 240. Restatement 2d of Contracts § 373(c)

Question 22

A contracts to work as a consultant for B for a fee of $50,000, payable at the end of the year, together with a payment of $200 a month for A’s use of his own car and reimbursement of A’s expenses. B wrongfully discharges A at the end of six months. What restitution, if anything, can A recover?

Answer 22

A cannot recover in restitution for the use of his car or for his expenses, but can recover for these items as provided in the contract. As to his recovery for his services, see Illustration 12 to § 373. Restatement 2d of Contracts § 373(c)

Question 23

A contracts to build a building for B in return for B’s promise to transfer a tract of land to A and to pay $10,000. After A has built the building, B refuses to transfer title or to pay the $10,000. What restitution, if anything, can A recover?

Answer 23

A has a right to the reasonable value of his work and materials. Restatement 2d of Contracts § 373(b)

Question 24

A contracts to sell a tract of land to B for $100,000. After B has paid the full $100,000, A repudiates and refuses to transfer title. What restitution, if anything, can B recover?

Answer 24

B has a right to $100,000 in restitution. Restatement 2d of Contracts § 373(b)

Question 25

A contracts to work for B for one month for $10,000. After A has fully performed, B repudiates the contract and refuses to pay the $10,000. What, if anything, can A recover regarding damages and/or restitution?

Answer 25

A can get damages against B for $10,000, together with interest, but cannot recover more than that sum even if he can show that the benefit to B from the services was greater than $10,000. Restatement 2d of Contracts § 373(b)

Question 26

A, who holds a mortgage on B’s land, promises B that he will not foreclose the mortgage for another year, even if B makes no payments. In reliance on A’s promise, B makes valuable improvements. A forecloses in breach of his promise and buys the land at a judicial sale for the amount of the mortgage debt. What restitution, if anything, can B recover?

Answer 26

B can recover in restitution for the value of the improvements. Compare Illustration 1 to § 370. See also Illustration 12 to § 90. Restatement 2d of Contracts § 373(a)

Question 27

On February 1, A and B make a contract under which, as consideration for B’s immediate payment of $50,000, A promises to convey to B a parcel of land on May 1. On March 1, A repudiates by selling the parcel to C. On April 1, B commences an action against A. What restitution, if anything, can B recover?

Answer 27

Although under the rule stated in § 253(1), B has no claim against A for damages for breach of contract until performance is due on May 1, B can recover $50,000 from A in restitution. See Illustration 4 to § 253. Restatement 2d of Contracts § 373(a)

Question 28

A contracts to build a house for B for $100,000, progress payments to be made monthly. After having been paid $40,000 for two months, A commits a breach that is not material by inadvertently using the wrong brand of sewer pipe. Can B recover the $40,000?

Answer 28

B has a claim for damages for partial breach but cannot recover the $40,000 that he has paid A. Restatement 2d of Contracts § 373(a)

Question 29

A contracts to sell a tract of land to B for $100,000. After B has made a part payment of $20,000, A wrongfully refuses to transfer title. What restitution, if anything, can B recover?

Answer 29

B can recover the $20,000 in restitution. The result is the same even if the market price of the land is only $70,000, so that performance would have been disadvantageous to B. Restatement 2d of Contracts § 373(a)

Question 30

A makes an oral contract with B under which A transfers 1,000 shares of stock to B in return for B’s promise to convey a tract of land to A. B repudiates the contract before he has conveyed the land and tenders back the stock and the dividends received from it and keeps his tender good. A rejects the tender and sues B for restitution of the value to B of the stock. What restitution, if anything, can A recover?

Answer 30

A cannot recover the value of the stock. Restatement 2d of Contracts § 372(c)

Question 31

A contracts to transfer to B half of his 20,000 shares of stock in the X Corporation in return for B’s promise to pay $100,000, to organize a holding company to control X Corporation and to protect A’s remaining interest as a shareholder. After A has transferred the stock and B has paid the $100,000, B refuses to organize the holding company. A sues B for specific restitution. May specific restitution be properly granted?

Answer 31

Specific restitution may properly be granted conditional on repayment by A of the $100,000. Restatement 2d of Contracts § 372(b)

Question 32

A contracts to transfer a tract of land to B in return for B’s promise to transfer a tract of land to A at a later date. After A has transferred his tract of land to B, B sells both tracts to C, a good faith purchaser for value, taking a mortgage to secure the balance of the price on the tract transferred by A. A sues B and C for specific restitution. May specific restitution be properly granted?

Answer 32

Specific restitution will be denied but A can get a decree subrogating him to B’s right to the balance of the price and to his rights under the purchase money mortgage that secures it. Restatement 2d of Contracts § 372(b)

Question 33

A contracts to transfer a tract of land to B in return for B’s promise to support A for life. B repudiates the contract after he has supported A for a time and A has transferred the land to him, and A sues B for specific restitution. May specific restitution be properly granted?

Answer 33

Specific restitution will be granted, conditional on compensation by A for any support that he has received less the value to B of the use of the land, because the right to specific restitution will not unduly interfere with the certainty of title to land given the inadequacy of A’s right to damages because of the difficulty of proving damages with sufficient certainty (§ 352). Restatement 2d of Contracts § 372(b)

Question 34

A contracts to transfer a tract of land to B in return for B’s promise to transfer a tract of land to A at the same time. After A has transferred his tract to B and received a deed from B, A learns that B does not have title to the other tract. A sues B for specific restitution. May specific restitution be properly granted?

Answer 34

Specific restitution will be granted, together with compensation to A for the value to B of the use of the land, because the right to specific restitution will not unduly interfere with the certainty of title to land. If B’s promise is to transfer his tract to A ten years after A’s transfer of his tract, specific restitution will be denied because a right to specific restitution would unduly interfere with the certainty of title to land during the ten years. Restatement 2d of Contracts § 372(b)

Question 35

A is induced by B’s misrepresentation to sell a tract of land to B for $100,000. On discovery of the misrepresentation, A tenders back the $100,000 and sues B for specific restitution of the land. May specific restitution be properly granted?

Answer 35

Specific restitution will be granted. Restatement 2d of Contracts § 372(a)

Question 36

A, a social worker, promises B to render personal services to C in return for B’s promise to educate A’s children. A renders only part of the services and B then refuses to educate A’s children. The market price to have a similar social worker do the services rendered by A is $1,800. What restitution, if anything, is A entitled to?

Answer 36

If A recovers in restitution under the rule stated in § 373, an appropriate measure of the benefit conferred on B is the reasonable value to B of A’s services in terms of the $1,800 that it would have cost B to engage a similar social worker to do the same work. Restatement 2d of Contracts § 371(b)

Question 37

A, a surgeon, contracts to perform a series of emergency operations on B for $3,000. A does the first operation, saving B’s life, which can be valued in view of B’s life expectancy at $1,000,000. The market price to have an equally competent surgeon do the first operation is $1,800. What restitution, if anything, is A entitled to?

Answer 37

A’s restitution interest is equal to the benefit conferred on B. That benefit is measured by the reasonable value to B of A’s services in terms of the $1,800 that it would have cost B to engage a similar surgeon to do the operation regardless of the rule on which restitution is based. Restatement 2d of Contracts § 371(b)

Question 38

A, a carpenter, contracts to repair B’s roof for $3,000. A does part of the work at a cost of $2,000, increasing the market price of B’s house by $1,200. The market price to have a similar carpenter do the work done by A is $1,800. What restitution, if anything, is A entitled to?

Answer 38

A’s restitution interest is equal to the benefit conferred on B. That benefit may be measured either by the addition to B’s wealth from A’s services in terms of the $1,200 increase in the market price of B’s house or the reasonable value to B of A’s services in terms of the $1,800 that it would have cost B to engage a similar carpenter to do the same work. If the work was not completed because of a breach by A and restitution is based on the rule stated in § 374, $1,200 is appropriate. If the work was not completed because of a breach by B and restitution is based on the rule stated in § 373, $1,800 is appropriate. Restatement 2d of Contracts § 371(b)

Question 39

A, a social worker, promises B to render personal services to C in return for B’s promise to educate A’s children. B repudiates the contract after A has rendered part of the services. What restitution, if anything, is A entitled to?

Answer 39

A can get restitution from B for the services, even though they were not rendered to B, because they conferred a benefit on B. See Illustration 3 to § 371. Restatement 2d of Contracts § 370(a)

Question 40

A contracts to work full time for B as a bookkeeper. In breach of this contract, A uses portions of the time that he should spend working for B in keeping books for C, who pays him an additional salary. B sues A for breach of contract. If B takes action against A, what––if anything––can B recover?

Answer 40

B cannot recover from A the amount of the salary paid by C because it was not a benefit conferred by B. Restatement 2d of Contracts § 370(a)

Question 41

A promises to deposit $100,000 to B’s credit in the X Bank in return for B’s promise to render services. A deposits the $100,000, the X Bank fails, and B refuses to perform. What restitution, if anything, is A entitled to?

Answer 41

A can get restitution of the $100,000 because a benefit was to that extent conferred on B even though it was lost by B when the X Bank failed. See § 373. Restatement 2d of Contracts § 370(a)

Question 42

A contracts to sell B a machine for $100,000. After A has spent $40,000 on the manufacture of the machine but before its completion, B repudiates the contract. What restitution, if anything, is A entitled to?

Answer 42

A cannot get restitution of the $40,000 because no benefit was conferred on B. Restatement 2d of Contracts § 370(a)

Question 43

A, who holds a mortgage on B’s house, makes a contract with B under which A promises not to foreclose the mortgage for a year. In reliance on this promise, B invests money that he would have used to pay the mortgage in improving other land that he owns. A repudiates the contract and forecloses. What restitution, if anything, is B entitled to?

Answer 43

B cannot get restitution based on the improvements since making them conferred no benefit on A. But see Illustration 4 to § 373 and Illustration 11 to § 90. Restatement 2d of Contracts § 370(a)