Damages Flashcards
What is the formula for expectation damages?
(plaintiff’s loss in value) + (Other losses) - (plaintiff’s costs avoided) - (loss avoided)
What is often the problem with expectation damages?
They are too speculative and it’s hard to establish them with reasonable certainty
The losses suffered had to have been foreseeable, and courts don’t want injured parties to collect more from a breach than they would have gained had the contract been fully performed
What happened with the expectation damages in Freund v. Washington Press
In Freund, plaintiff expected royalties from manuscript publishing, court was uncertain what amount that would have been, too speculative
How do expectation damages work in the context of unfished or defective construction - Peevyhouse
A court will not impose expectation damages if the cost to fix the problem would end up being significantly more than the improvement to the value of the property
What are a seller’s damages after he has delivered goods and the buyer accepted but refused to pay for them?
The original contract price for the goods 2-709
What are a seller’s damages for reselling goods after a buyer’s breach?
Original contract price minus the resale price 2-706
What are a seller’s damages for a hypothetical resale of the goods where he doesn’t or can’t do so after a buyer’s breach?
Original contract price minus the market price of the good 2-708(1)
What are a lost volume seller’s damages for reselling goods after the buyer’s breach?
Original contract price minus the seller’s direct costs 2-708(2)
What is a lost volume seller?
- A seller who had the capacity to make an additional sale at the time of the breach
- A seller who intended to make additional sales
What must a seller show regarding a resale to prove that they were lost volume?
They must show that the additional sale they made was logically independent from the buyer’s breach
E.G., if there is only one item of a certain kind left at a dealership, then the sale of that good to someone else is logically dependent on the breach
What other damages to sellers get?
Incidental damages relating to the costs of reselling the goods, but not consequential
What are a buyer’s damages for covering after a seller’s breach?
Original contract price minus the cover price 2-712
What are the general rules of cover?
A buyer must cover reasonably and in good faith without unreasonable delay
What are a buyer’s damages if he refuses to cover or simply can’t after a seller’s breach?
Market price at the time the buyer learned of the breach minus the original contract price 2-713
What affect does refusing to cover have on a buyer’s damages?
If a buyer chooses not to cover, they do not get consequential damages
What will a court do regarding a buyer’s hypothetical cover under 2-713 if the market price ends up being the same as the original contract price - American Mechanical v. Union Mach
The court will default to a different measure of damages since a market price that’s the same as the original contract price would leave a buyer with 0 damages
They may also choose to impose a different market value
When we use the term market value, which market are we talking about - Simeone v. First Bank
Market should be the same as the one revolving around the original contract. In Simeone, the proper market was the one for collectible cars, not the market for a bank reselling collectible cars
What are a buyer’s damages for receiving goods which breached a warranty?
Price of the goods if they had been as warranted minus the price they were at the time and place of acceptance
What other kinds of damages do buyers get?
Incidental damages related to effectuating cover and consequential damages
What is the rule for consequential damages - Hadley v. Baxendale
They must have been foreseeable at the time the contract was made. Foreseeable damages are divided into those that follow from the ordinary course of events and those that result from special circumstances that the breaching party had reason to know of
Consequential damages are those that follow on as a consequence of the breach - New Valley v. US
How does causation factor into a determination of damages resulting from breach of contract?
Damages are only recoverable that would not have happened “but for” the breach - RS 347
Contract damages must arise naturally from the breach or be a kind that may have been reasonably anticipated by the parties when they entered the contract. Evidence for causation must be shown to prove whether losses were the result of a breach or were related to other independent factors – Redgrave v. Boston Symphony
Do all parties have a responsibility to mitigate? If not, who is excluded?
Most parties have a duty to prevent any further loss resulting from a breach of contract - RS 351
Lost volume sellers have no duty to mitigate - In re World Com
What is the general rule regarding mitigation and cover?
- Damagers are not recoverable for loss that the injured party could have avoided without undue risk, burden or humiliation
- A party may still recover if they made reasonable, but unsuccessful efforts to mitigate their losses
What are reliance damages?
Expenditures made in preparation for performance or in performance minus any loss that the party in breach can prove with reasonable certainty that the non-breaching party would have suffered had the contract been performed.
