Damages Flashcards
Expectation damages
objective to put injured party in position he would have been had K not been breached
Computation of damages-Standard formula
Loss in value+other losses-costs avoided-loss avoided
Damage Analysis-types of Ks
Real property, Employment K, Construction K, and K for sale of goods
Real property-Sellers measure of damages formula
K price-MKT price(at breach)-other losses-loss avoided
Real property-Buyer measure of damage formula
English rule-Restitution of money paid unless seller’s breach in bad faith. American rule-MKT price(at breach)-K price+other losses-loss avoided
Employment K-Employer able to replace employee formula
Cost to replace employee (new salary)+other losses(Incidental/consequential)-cost avoided (unpaid salary)
Employemtn K-Employer not able to replace employee formula
FMV of employee’s services+other losses-cost avoided
Employment K-Employee measure of damages formula
Unpaid salary+other losses-cost avoided-loss avoided
Construction K-Builder’s measure of damage formula
Loss in value+other losses-costs avoided-lost avoided
Construction K-Owner’s measure of damages
General: Cost to complete or repair-costs avoided.. (public policy, willful breach) Alternative: Diminution in value (value w/o breach-value w breach). Factors that favor diminution of value: Economic waste. Substantial performance with unintentional deviation.
K for sale of goods-Seller’s damages formula
K price-MKT price+incidental $$-expenses saved
K for sale of goods-Seller’s damages, Alternatives
- If resale lower than MKT price: K price-resale price+incidental $$-expenses saved
- Lost profits-What Seller would have made.
K for sale of goods-Lost profits categories
Lost volume seller-sufficient volume that seller can make profit on sale to B and C. Components seller-specifically manufactured goods for buyer; not readily sold on open Mkt. Jobber-seller intends to buy for resale to B and B breaches before seller buys goods.
K for sale of goods-Buyer’s damages formula
Mkt price (at time B learns of breach) - K price + incidental/consequential $$ - expenses paid.
K for sale of goods-buyer’s damage alternatives
- Cover price - K price + incidental/consequential $$ - expenses paid.
- Specific performance-unique goods.
Doctrines that D can raise to limit the damages
- Foreseeability 2. Certainty 3. Causation 4. Mitigation
Foreseeability
Not liable for damages because they were not foreseeable by D.
Foreseeability-Two part test
- Damage flow naturally from the breach; OR 2. They must have been within the parties contemplation of the K
Certainty
P cannot prove damages to reasonable degree of certainty
Certainty-Two ways it will apply
- New business-Traditionally unable to prove lost profits to reasonable degree of certainty. Trend-Allow data from comparable established businesses.
- Public whim-Lost profits too speculative and uncertain for entertainment, sporting events, etc.
Causation
Breach must be proximate cause of injured party’s losses/damages. Damages limited to losses incurred before event.
Employee’s loss avoided and Mitigation to employment
Other jobs during k term unless possible absent breach. Other jobs employee could have held if employer shows; comparable and as or more convenient, employee reasonably failed to look for job, and reasonably likely employee would have found job.
Mitigation
Breaching party not required to compensate injured party for avoidable damages.
Mitigation (independent contractor and mitigation to leases)
Independent contractor presumed to be capable of handling 1+ Ks at a time. Earnings from other Ks not deducted. In most jurisdictions lessors required to mitigate by attempting to re-rent upon lessee’s default.
Non-recoverable damages
- damages for emotional distress 2. attys fees 3. punitive damages
non recoverable damage emotional distress-exceptions
Ks dealing with death, Ks of carrier and innkeepers with guests, Wanton/Reckless breach and bodily injury, bodily injury or K or breach of such a natural, emotional distress likely result, and bad faith breach of insurance K
non recoverable damage attys fees exceptions
If K says available, By law, collateral litigation, lawsuit vs insurer to enforce K
non recoverable damage punitive damages exception
breach of insurance K
Alternatives to expectation damages
Reliance, Restitution, Specific performance, and Agreed remedies
Reliance
Put party in position party was in before K. Application; Expectations too speculative. Out of pocket expenses. Recission of K.
Restitution (applications)
- injured party 2. breaching party 3. either or both parties excused
Restitution objective
to prevent breaching party from benefitting at the expense of the injured party
Restitution-Injured party
Damages based on the reasonable value of P’s services and may exceed K price. Losses not deducted.
Restitution-Injury party exceptions
Injured party must complete performance because breach not material. Injured party has completed performance and breaching party’s only remaining duty is to pay money.
Restitution-Breaching party
Material breach (no recovery under K). Get reasonable value of the benefit conferred. Amount cannot exceed the K price and recovery offset by $$ owed to injured party
Restitution-Either or both parties excused
Any of the excusing doctrines (mistake, impracticability, etc). Recovery based on benefit conferred.
Specific performance (what is it and when available)
Equitable remedy within court’s discretion. Available only where remedy at law inadequate; real prop, damages speculative, unique goods, money damages likely uncollectable.
Specific performance-Limitations
Court will not order employee to work for employer. (may enjoin employee from working for another through negative injunctive relief). Court will not order employer to hire employee (unless employment discrimination, statutes). Court less likely to order injunctive relief once K has ended. Injunctive relief generally based on unique services.
Agreed remedies (liquidated damages clause or penalty)
Is the agreed damages clause intended to compensate injured party (OK); OR punish breaching party (Not OK).
2 requirements for liquidated damages clause
Damages must be uncertain and difficult to prove; AND amount of liquidated damages must be reasonably related or anticipated lossses.
Agreed remedies–parties not required to?
deduct mitigation earnings
