Expectation Damages

Question 1

What are the typical damages?

Answer 1

Expectation Damages

Question 2

How are expectation damages measured?

Answer 2

Want to put the party in the same economic position as if the contract had been performed

What is the cost to complete the contract as it should have been?

VALUE OF PERFORMANCE compared to VALUE OF CURRENT performance with the breach (doesn’t care about change in market price, just the benefit of the contract)

Must be reasonably similar

Question 3

3 Limits on the Calculation of Expectation Damages

Answer 3

1. They must be proven with reasonable certainty (Note unproven businesses with no track record for lost profits)
2. Consequential damages (losses unique to this plaintiff) must be reasonably foreseeable or the other side must have had reason to know about them
3. Non-breaching party MUST take reasonable steps to mitigate damage

Question 4

Lost Volume Profits

Answer 4

Usually mitigation requires re-selling the goods or services to another person

BUT if the seller is a retailer who sells these goods all the time, they can ask for LVP (won’t treat subsequent sales of normal goods as mitigation for the breach)

Question 5

Formula for incomplete performance

Answer 5

When breach occurs mid-job

Expectation Damages = Contract Price - what has already been paid - Amount they are saving by not finishing the job

Question 6

What if cost to complete would dramatically overcompensate the plaintiff?

Answer 6

Can use diminution in market value

IF the breaching party acted in an unintentional manner