Damages for BOC

Question 1

Remedy for BOC

Answer 1

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

Question 2

BOC Measure of Damages

Answer 2

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

Question 3

2 types of expectation damages

Answer 3

Direct Damages (a/k/a general damages) &
Consequential Damages (a/k/a special damages)

Question 4

Direct Damages

Answer 4

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.

Question 5

What ALWAYS provides the measurement by which direct damages are calculated?

Answer 5

Consideration

Question 6

General Rule on Default of RE Ks

Answer 6

seller may recover the difference entre K price y fair market value.
P has BOP FMV on date of breach

Question 7

Consequential Damages Def

Answer 7

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

Question 8

Hadley v Baxendale

Answer 8

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

Question 9

Limits on Consequential Damages

Answer 9

• reasonably foreseeable
• cannot be speculative
• duty to mitigate

Question 10

Loss of Future Profits is Recoverable if:

Answer 10

(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)

Question 11

UCC Damage Rule:

Answer 11

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.

Question 12

Cost Avoided Def

Answer 12

things you did not have to buy as a result of breach

Question 13

Loss Avoided Def

Answer 13

Mitigation - reasonable effort to cover losses

Question 14

Mitigation

Answer 14

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)

Question 15

Policy behind Mitigation

Answer 15

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

Question 16

Steps to Measure Mitigation Damages:

Answer 16

1. figure out what the position of the non-breaching party would have been if the promise had been kept
2. 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

Question 17

Repudiation

Answer 17

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

Question 18

Suitable employment

Answer 18

that which is substantially equivalent to the position lost and suitable to a person’s background and experience

Question 19

Employee’s Cost to Mitigate

Answer 19

Is recovverable when making reasonable efforts to find another job

Question 20

Additional v Mitigating Contracts

Answer 20

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

Question 21

Mitigating K

Answer 21

lack the capacity to enter into more than one K prior to breach

Question 22

Additional K

Answer 22

have the capacity to enter into more than 1 K prior to breach

Question 23

Lost Volume Seller Rule as to damages?

Answer 23

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

Question 24

How to establish status as lost volume seller

Answer 24

P must prove:

1. possessed the capacity to make an additional sale
2. that it would have been profitable for it to make an additional sale
3. that it probably would have made an additional sale absent buyer’s breach

Question 25

Items Commonly Excluded from P’s Damages for BOC

Answer 25

Atty Fees & Emotional Distress

Question 26

Damages for Atty Fees

Answer 26

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.

Question 27

Exceptions to American Rule on Atty Fees

Answer 27

1. Rule 11: sanctions on attys who abuse the legal system - frivolous or bad faith claim brought
2. contract itself proivdes that losig party pays atty fees
   statutory exceptions, including UCC (but not usually)

Question 28

Damages for Emotional Distress

Answer 28

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.