Limitations on Damages Flashcards
Forseeability Doctrine
Expectation damages for aggrieved party are limited to those that either:
Arise naturally, i.e., according to usual course of things, from breach; or
Are within contemplation of both parties at time of contracting, and the probable consequences of breach.
Morrow v. First National Bank
Minority Rule for Special Damages: Tacit Agreement Rule
Knowledge of special circumstances
Consent to more than ordinary damages “special damages”
Restatement §351. Unforeseeability and Related Limitations on Damages
Damages are not recoverable for losses that breaching party did not have reason to foresee as a probable result of breach at time of contracting
Foreseeable loss = loss following from breach
In ordinary course of events or
As a result of special circumstances that breaching party had reason to know
Court may limit damages for foreseeable loss by excluding lost profits, limiting plaintiff to her reliance interest, or otherwise… to avoid “disproportionate compensation.”
Filling out foreseeability doctrine
Judged at time of formation
Objective reason to know standard
Applies to both kind and magnitude of loss
Asymmetric, high damages only
Must be probable
Certainty
limits Expectation Damages and rarely limits Reliance Damages; often comes into play with profits (when constrained by certainty doctrine, switch to reliance)
Chicago Coliseum Club v. Dempsey
Certainty requires that damages be incurred and measurable
Pre-contractual damages are not recoverable - must have been those incurred as a necessary expense in furtherance of the performance
Anglia Television Ltd. v. Reed (England)
Minority Rule: Can recover pre-contractual reliance damages if costs were reasonably in contemplation by the time of the contract
Restatement § 352. Uncertainty as a Limitation on Damages
Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty
Filling out Certainty Doctrine:
Particularity: With what degrees of particularity to apply?
- Applies to each element of loss claimed
Time? When is certainty (or lack thereof) relevant?
- At the time of litigation
How to prove?
- In most jurisdictions, you do not have to establish a specific number with reasonable certainty, but only that the type of damage is reasonably certain to be greater than 0
- Expert testimony can quantity the loss of chance
Avoidability Doctrine
damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.
Restatement § 350. Avoidability as a Limitation on Damages
Except as stated in Subsection (2), damages are not recoverable for loss that the injured party could have avoided without undue risk, burden, or humiliation.
The injured party is not precluded from recovery by the rule stated in Subsection (1) to the extent that he has made reasonable but unsuccessful efforts to avoid loss.
Rockingham County v. Luten Bridge Co.
When a non-breacher in a contract for services received notice of breach, non-breacher must treat the contract as broken when notice is received, cease performance, and sue immediately.
Parker v. 20th Century Film Corp.
Measures of recovery by wrongfully discharged employee is the amount of salary agreed upon for the period of service, minus the amount which the employer affirmatively proves the employee has earned or with reasonable effort might have earned from other employment
Lost Volume Seller
avoidability of harm still applies but is subject to the “Lost Volume Seller” exception
Neri v. Retail Marine Corp.
Lost Volume Seller Doctrine: Under UCC § 2-708(2), if a buyer repudiates a contract with a lost-volume seller, the seller is entitled to lost profits, plus reasonable incidental damages associated with resale
Lost volume seller doctrine requires there to be a nearly inexhaustible supply and a limited number of buyers
