Contract Damages

Question 1

Types of Contract Actions

Answer 1

Breach of Contract: (See remedies for Contract→ compensatory damages, nominative damages, punitive damages, rescission, discharge of duty to perform, court ordered contracts) : ANYTHING WITH BUYING + SELLING!

Broken Promise when there is No Valid Contract

Question 2

Expectation Damages

Answer 2

Expectation damages are based on the disappointed expectation of the aggrieved party. They are based on the difference between what was promised and what was received within the four corners of the contract.

Question 3

Measurement of Expectation Damages

Answer 3

Generally determined by the K price. Difference in value between What P expected - What P received. (Chatlos)

or Contract Price - What was Received.

Can also use Cost of Cover - Contract Price

Question 4

Volume Seller Measurement

Answer 4

Damages = a volume seller’s profits [that would have been made on each sale if the contract was fully performed] + reliance damages [damages that that seller incurred in reliance of performance of the contract, i.e.: storage). (Neri)

Volume sellers do not get full expectancy damages (the contract price).

Not sure if they are a volume seller? (sell some custom items, some not) → talk about both regular damages and volume seller damages
If they only sell custom products, they are NOT a volume seller
Ex: a car dealership

Question 5

If a mix of tort + contract claims and contract cannot adequately provide measurement, then:

Answer 5

When a cause of action is a tort+contract (tortious interference w/ contract, fraud, misrepresentation, etc.), then court will look “behind” express terms and use the actual expectation or benefit of the agreement instead (Pennzoil

Question 6

Reliance Damages

Answer 6

Reliance damages are damages incurred in reliance on performance of the contract. (Neri- storage of the boat)

Question 7

Liquidated Damages

Answer 7

Liquidated damages are a precalculated form of monetary recovery in the event of a contract breach. Liquidated damages must be reasonable in light of anticipated actual damages and the actual damages must be relatively certain. Liquidation is appropriate in a situation where it is going to be a hassle to prove actual losses down to a nickel and dime. If it’s straightforward to prove actual losses, then LD not appropriate.

Cannot be over-liquidated amounting to a penalty

Cannot be under-liquidated amounting to a waiver

The modern approach is that liquidated damages cannot be unconscionable- that is, they will be enforced if the parties have bargained fairly and at arms’ length for the liquidated damages provision under general contract principle

Question 8

Punitive Damages

Answer 8

Generally unavailable in contract per se, although possibly available for related tort such as misrepresentation or fraud or coercion.

Question 9

IF BROKEN PROMISE + NO VALID K:

Answer 9

Reliance Damages

Question 10

Consequential Damages

Answer 10

Consequential damages result from a breach of the contract terms but are “outside” the contract. They must be foreseeable to both parties at the time they form the contract. (Hadley v. Baxendale). Must foreseeably result from the contract breach, but not formally included in the terms of the contract. (Merinath). Can include additional expenses and losses flowing naturally and proximately from the termination of the contract and not necessarily foreseen at the time the contract was executed. (Buck v. Morrow).

Question 11

Methods of Consequential Damages Measurement:

Answer 11

Can apply to lost profits or opportunities
Can apply to loss of use
Special corcumstances can limit
“Interest only rule”: can limit damages that are too speculative for independent ventures that suffer as result of late/missed payment