Damages Flashcards
Reliance
Costs or losses caused by the breach, and it places him back where he was before the promise.
Expectation
Expectation interest is the value of the unperformed promise, minus cost avoided—designed to put the promisee where he would be if the promise were fulfilled. Sometimes will add other loss if applicable.
Value of unperformed promise is typically FMV - K price.
UCC - Award SP when seller still possess thing, SP does not require monitoring, avoids need to compare inexact “comparable”, avoids lengthy battle of experts/facts regards to FMV.
Lost Profit Formula
When resale is possible. Loss Profit Formula = K price - Market Value or Resale Value + other losses.
When resale is NOT possible. Expected profit = K price - total expected cost of work + other losses.
RST Limitations - loss profits not recoverable if D had no reason to foresee the loss as a probable result of breach when K made. Court may recovery for lost profits if required to avoid disproportionate compensation.
When Supplier is an Employee
DAS = pay for remaining term - value of service.
Value of unperformed promise is salary. Cost avoided is service and time. Resale is like obtaining sub employment. Employee has duty to mitigate/avoid loss by finding another job.
Lost Volume Dealers
When a seller could have sold more had it not been for buyer or supplier’s breach. The next sale is not a substitute for the lost sale. One buyer’s breach reduces the total number of sales.
DAS = expected profit (k price - variable costs) + costs incurred - scrap value.
Not a lost volume dealer if inventory is capped and goods are not fungible (new cars v. Used).
Lost volume buyers, where buyer made a resale K for goods and seller repudiates.
DAS = UCC majority view says award difference between market price and K price.
Other Loss = Incidental and Consequential Damages
Incidental damages: Costs of responding to breach or arranging a substitute.
Consequential Damages: Interruption of business/profit; personal injuries. (Limits: Duty to mitigate, foreseeability, reasonably certain proof).
Use Alternative Measures (Reliance and Restitution) of DAS when expectation is not the best
When P does not have much BoB or other losses. If proving expectation could be harder or more expensive than others. Expectation too speculative; doesn’t meet certainty requirement. Expectation too speculatively doesn’t meet certainty requirement. Litigation is expensive, compromising with restitution or reliance is rational. Defendant BoB (P made a losing K).
