Damages

Question 1

Compensatory

Answer 1

Intended to compensate plaintiff (P) for legally recognized harm/injury; award seeks to place P in same position he would have been in had he not been harmed by D’s tortious behavior or breach of contract

Tort action (retrospective)
• Put P in same position he was in prior to tort, including past/present/future harms
• Includes pain and suffering (no pecuniary loss required – noneconomic damages) and
loss of enjoyment

Contract action (prospective)
• Put P in same position that he would have been in had the defendant (D) performed
his contractual obligations (expectation interest)
• Damages
o Buyer (B) entitled to difference between market price (when B learns of breach) and contract price plus any incidental and consequential damages and less expenses saved as a consequence of seller’s (S’s) breach
o Or, if B seeks cover—B then entitled to difference between replacement cost and the contract price
o If B accepts nonconforming goods—B may pursue breach of warranty action; B can recover difference between value of goods accepted and value of goods as warranted (plus incidental and consequential damages)
o Revocation of acceptance—in addition to recovering market K differential, B can
recover any amount paid to S for the goods

Question 2

Reliance

Answer 2

P can recover expenditures related to performance of contract—Damages cannot
exceed contract price

Question 3

Restitutionary

Answer 3

If there is total breach of the contract by D, damages measured by benefit conferred on D by P

Question 4

Nominal

Answer 4

Awarded when P established a cause of action but suffered little or no harm/loss

Question 5

Punitive

Answer 5

Awarded to punish D who engages in serious misconduct with an improper state of mind. Usually not awarded in excess of compensatory damages

Question 6

Liquidated

Answer 6

Agreed upon during formation of contract - enforced if amount is reasonable in light of anticipated loss at contract formation or actual loss caused by breach. Unreasonable amount is unenforceable and seen as a penalty. Agreement to accept arbitrator’s decision re remedies generally enforceable.

Question 7

Incidental

Answer 7

Reliance-type reasonable expenses incurred in a transaction that are recoverable without special proof

Question 8

Limitations on damages

Answer 8

1. Causation—but for D’s behavior, P would not have suffered injury; other causes considered as well
2. Foreseeability (negligence)—D only liable for harms reasonably foreseeable at the time D breached his duty
3. Consequential damages (contracts)—consequential damages that arise naturally from the breach, were within the contemplation of the parties at contract formation, or were otherwise foreseeable are recoverable
4. Certainty—damages must be reasonably certain
5. Lost profits/earnings or prospective harm vulnerable to uncertainty
6. Avoidable consequences—P is denied recovery for any harm/loss that P could have reasonably avoided. D has burden of proof.
7. Reduction for benefits from D’s conduct
   • Direct benefit—P’s recovery will be reduced if it is a direct consequence of D’s tortious conduct (torts) or D’s breach results in a savings to P (contracts)
   • Collateral source—P’s recovery not reduced by third-party benefits for harm suffered due to D’s conducts (not applicable in contracts)
8. Emotional distress damages (contracts)—not generally awarded
9. Special (consequential) damages—must be specifically pleaded

Question 9

Prejudgment interest

Answer 9

Awarded when damages are liquidated or determined by fixed standard

Question 10

Litigation expenses

Answer 10

Generally recoverable if authorized by statute or provided for in the contract