Damages for BOC Flashcards
Remedy for BOC
Expectation Damages; aimed to give non-breaching party the BOB = to make party whole by restoring to financial equivalent of what she would have obtained if K had been performed
BOC Measure of Damages
the amount which will compensate the non-breaching party for any loss directly caused thereby (direct damages), plus any consequential damages which in the ordinary course of things would likely result therefrom, less and avoided costs and/or avoided losses
2 types of expectation damages
Direct Damages (a/k/a general damages) & Consequential Damages (a/k/a special damages)
Direct Damages
Damages result naturally from D’s breach and are calculated by measuring the difference between the net value of what the breaching party promised and what the non-breacing party received.
What ALWAYS provides the measurement by which direct damages are calculated?
Consideration
General Rule on Default of RE Ks
seller may recover the difference entre K price y fair market value.
P has BOP FMV on date of breach
Consequential Damages Def
Losses that do not flow directly and immediately from the act of the breaching party, but result as a 2ndary conseuence of te breach.
**Recoverable only if communicated to or known by both parties at the time they entered K
Hadley v Baxendale
special damages must be foreseeable to breaching party at the time of execution of the contracy
Why? this limitation serves to encourage K relations by enabling parties to estimate in advance the financial risks of their venture
RPP test - if RPP in his shoes would have known
Limits on Consequential Damages
- reasonably foreseeable
- cannot be speculative
- duty to mitigate
Loss of Future Profits is Recoverable if:
(Florifax)
1. if the loss is w/in the contemplation of the parties at the time the K was made
2. if the loss flows directly or proximately from the breach; and
if the loss is capable of reasonably accurate measurement
(amount to be determined by trier of fact)
UCC Damage Rule:
Seller’s damages: difference between market price at time of tender and unpaid K price together with any indicential damages, but less expenses saved in consequence of the buyer’s breach
Buyer’s damages: difference b/t the market price at the time when the buyer learned of the breach and the K price together with any incidental and consequential damages, but less expenses saved in consequence of the seller’s breach.
Cost Avoided Def
things you did not have to buy as a result of breach
Loss Avoided Def
Mitigation - reasonable effort to cover losses
Mitigation
An injured party has a duty to make reasonable efforts to limit or avoid unnecessary losses. If you want to recover, you must mitigate.
Courts look to reasonableness of efforts (how much efforts cost v.how much non-breaching party would save by taking those steps)
Policy behind Mitigation
Even if D caues injury, he should not be liable for damages that P could have reasonably avoid. K law does NOT want to increase the damages when it is in a position to prevent the loss.
To not have this rule would be to incentivize waste
Steps to Measure Mitigation Damages:
- figure out what the position of the non-breaching party would have been if the promise had been kept
- figure out the position that the non-breaching party would be in after the breach (provided the non-breaching party did whatever was reasonably possible to mitigate damages
c. figure out how much we need to give the non-breaching party to move them from the positionthey are in after the breach to the position they would have been in had the K been performed
Repudiation
to unequivocally tell the other party that you are not going forward with the contract/that you are reaching. Breach occurs at the moment notice of repudiation is given.
Repudiation must be clear
Suitable employment
that which is substantially equivalent to the position lost and suitable to a person’s background and experience
Employee’s Cost to Mitigate
Is recovverable when making reasonable efforts to find another job
Additional v Mitigating Contracts
Courts will look to willingness and capacity to enter into both contracts
Capacity and Volume
Were you willing and able to enter into both contracts?
If not: additional
If so: mitigating
Mitigating K
lack the capacity to enter into more than one K prior to breach
Additional K
have the capacity to enter into more than 1 K prior to breach
Lost Volume Seller Rule as to damages?
RULE: Dity to mitigate damages does not apply to lost volume sellers
Lost volume seller measure of damages refers to the lost volume of business the non-breaching seller incurs on buyer’s breach
How to establish status as lost volume seller
P must prove:
- possessed the capacity to make an additional sale
- that it would have been profitable for it to make an additional sale
- that it probably would have made an additional sale absent buyer’s breach
Items Commonly Excluded from P’s Damages for BOC
Atty Fees & Emotional Distress
Damages for Atty Fees
American Rule: unless a K dictates otherwise, each party must pay their own legal costs.
Why? in the US Constit, people have access to the courts and courts do not want to put poor people in fear that if they lose, they will be on the hook for very expensive atty fees. This would have the chilling effect of people not going to court.
Exceptions to American Rule on Atty Fees
- Rule 11: sanctions on attys who abuse the legal system - frivolous or bad faith claim brought
- contract itself proivdes that losig party pays atty fees
statutory exceptions, including UCC (but not usually)
Damages for Emotional Distress
As a matter of law, emotional distress is always unforeseeable (even though this is a legal fiction) per se.
Why? limitation on available damages serves to encourage contractual relations and commercial activity by enabling parties to estimate in advance the financial riss of their enterprise.
Exception: K deals with inherently emotional matter like death; or where breach also caused bodily harm
IIED generally limited to tort claims.
