Contracts: Essentials, Damages

Question 1

What are the four types of damages awarded through contracts?

Answer 1

Expectation Damages (Default)
Reliance damages
Restitution
Specific Performance

Question 2

What are Expectation Damages?

Answer 2

Expectation Damages puts the plaintiff where they would be had the contract been performed.

Question 3

What are Reliance Damages?

Answer 3

Reliance Damages put the plaintiff where it was before they entered into this agreement.
Sullivan v. O’Connor (pg 29)
Doctor messed up plaintiffs nose-job. Reliance damages awarded. Costs of operation covered. Expectation damages incalculable.

Question 4

What is specific performance?

Answer 4

Specific performance requires the defendant to perform her obligation of the contract.
Curtis Brothers v. Catts (pg 1110)
Facts: Defendant breaches in not selling tomatoes to a canning company. Because expectation damages would be insufficient as it would be impossible to know the actual extent of the damages for loss of season, court awarded specific performance
Rule: When there are circumstances when expectation damages would not compensate the injured party in a breach of contract action, the court may order specific performance even if the goods or services involved were not unique.

Question 5

What type of damages will a court award compensation?

Foreseeability

Answer 5

Only reasonably foreseeable damages are recoverable.
Hadley v. Baxendale (pg 41)
Facts: Defendant breached contract by late delivery of mill parts. Mill had to be closed for several days because the plaintiff had no substitute parts. Court did not allow Plaintiff to collect for lost earnings because Defendant was reasonably unaware.
Rule: Damages are limited to the foreseeable damage. Extraordinary or unique losses due to breach will only be recoverable if they are divulged to the other party prior to contracting

Question 6

What is consideration?

Answer 6

Consideration is something of value that one party to a contract grants the other. One promise in exchange for another promise or for performance. (Unilateral v Bilateral)
Consideration may be a benefit to the promisor or a legal detriment to the promisee (such as the relinquishment of a right)
Hamer v. Sidway
Facts: Uncle promises nephew, money if he doesn’t drink or smoke till he’s 21. Courts ruled there was valid consideration on both sides.
Rule: The waiving of a legal right is sufficient consideration.

Question 7

Consideration Rules

Answer 7

In re Greene
Facts: Decedent had a contract with his mistress to give her a lot of money in consideration of $1, past sexual relationships, and releasing him of his obligation to marry her. Courts ruled no consideration.
Rule (1): Nominal consideration is no consideration.
Rule (2): Past consideration is no consideration.
Rule (3): The desire for the parties to be bound will not substitute for actual consideration.
Rule (4): Releasing someone from an obligation they were not legally bound to, is not consideration.