Measuring Expectations Flashcards
Restatment 347: Measure of Damages in General
(Expectation interest + loss in value + incidental or consequential loss caused by loss) - any cost or loss avoided by not performing or mitigation of damages = damages award.
“The injured party has a right to damages based on his expectation interest as measured by:
(a) the loss in the value to him of the other parties performance caused by its failure or deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform. (mitigation of damages)”
See P#607 for more info
What is overhead and is it deducted when awarding damages?
Overhead is factories, taxes, utilities, etc. which is then spread out over every sale.
Court holds that there is no additional deduction for overhead costs when awarding damages.
What is cover?
Buyers enter into the market to buy substitute goods when the seller breaches.
A party has a duty to mitigate damages and that plays into this.
What is the collateral source rule?
An employee’s recovery in tort is reduced by sums received from a collateral source, such as unemployment compensation and similar benefits, in order to avoid double recovery.
UCC 2-703: Seller Remedies
Where the buyer wrongfully rejects or revokes acceptance of goods or fails to make payment or repudiates, then the aggrieved seller may:
1) withhold delivery of goods;
2) stop delivery;
3) proceed under 704 respecting goods still unidentified in the contract;
4) resell or recover damages;
5) recover damages for non-acceptance or in a proper case, the price;
6) cancel.
UCC 2-711: Buyer Remedies
(1) Where the seller fails o make delivery or repudiates or the buyer rightfully rejects or justifiably revokes acceptance then with respect to any goods involved, and with respect to the whole if the breach goes to the whole contract, the buyer may cancel and whether or not he has done so may in addition to recovering so much of the price has been paid:
(a) Cover and have damages under the next section as to all goods affected;
(b) recover damages for non-delivery.
(2) Where seller fails to deliver or repudiates, the buyer may:
(a) if the goods have been identified, recover them;
(b) in a proper case obtain specific performance or replevy the goods.
(3) On rightful rejection or justifiable revocation of acceptance a buyer may recover in anyway allowed.
UCC 2-706: Sellers Resale Including Contract for Resale
(1) Basically cover for sellers: Seller may resell the goods concerned or the undelivered balance thereof and then sue for the difference between the resale price and the contract price.
(2) Sale must be in any method, manner, time, place, or term that is commercially reasonable.
(3) Where the resale is at a private sale the seller must give the buyer reasonable notification of his intention to resell.
UCC 2-708: Sellers Damages for Non-Acceptance or Repudiation
(1) Damages = (market price - Unpaid contract price) + Incidental Damages
(2) Loss Volume Seller - if the measure of damages is inadequate to put the seller in as good a position as performance would have done when the measure of damages is the profit which the seller would have made from full performance by the buyer, together with incidental damages.
What is a loss volume seller?
One that has a predictable and finite number of customers and that has the capacity either to sell to all new buyers or to make the one additional sale represented by the resale after the breach. If the seller would have made the sale represented by the resale whether or not the breach occurred, damages measured by the difference between the contract price and market price cannot put the lost volume seller in as good a position as it would have been in had the buyer performed. The breach effectively cost the seller a profit and the seller can only be made whole by awarding it damages in the amount of its lost profit.
What does it take to prove a loss volume seller?
The breach effectively cost the seller a profit and the seller can only be made whole by awarding it damages in the amount of its lost profit.
To prove a lost volume seller requires:
(a) Had the capacity to produce the additional unit;
(b) Make a profit by making and selling the additional unit.
The seller must prove it.
What is Quantum Meruit recovery?
Recovering what one has earned.
Looks at the fair market value of the contract as performed. Similar to the idea of unjust enrichment.
