REMEDIES

Question 1

EXPECTATION DAMAGES FORMULA

Answer 1

(LOSS IN VALUE + OTHER LOSS ) –

COST AVOIDED BY ME + LOSS AVOIDED BY YOU

Question 2

A contracts to build a building for B on B’s land for
$100,000. B repudiates the contract before either
party has done anything in reliance on it. It would
have cost A $90,000 to build the building. What should damages be? 344.

Answer 2

A has an expectation interest of $10,000, the
difference between the $100,000 price and his
savings of $90,000 in not having to do the work.
- LOSS IN VALUE - COST AVOIDED BY ME
– Since A has done nothing in reliance, A’s reliance interest is zero.
– Since A has conferred no benefit on B, A’s restitution interest is zero.

Question 3

A contracts to build a building for B on B’s land for
$100,000. It would have cost A $90,000 to build the building. B does not repudiate until A has spent $60,000 of the $90,000 and the benefit to B of the partly finished building is $40,000. A has been paid nothing and can salvage nothing from the $60,000 spent. What should the damages be? 344

Answer 3

A has an expectation interest of $70,000, the
difference between the $100,000 price and his
saving of $30,000 in not having to do the work.
– A also has a reliance interest of $60,000, the
amount that he has spent.
– A has a restitution interest of $40,000.

Question 4

A, who is about to produce a play, makes a contract
with B, an actor, under which B is to play the lead in
the play at a stated salary for the season. A breaks
the contract and has the part played by another
actor. What should B’s expectation interest be? 344.

Answer 4

– B’s expectation interest includes the extent to
which B’s reputation would have been enhanced
if he had been allowed to play the lead in A’s
play, as well as B’s loss in salary, both subject to
the limitations stated in Topic 2.

Question 5

A contracts to construct a monument in B’s yard for
$10,000 but abandons the work after the foundation has been laid. It will cost B $6,000 to have another contractor complete the work. The monument planned is so ugly that it would decrease the market price of the house. What should B’s expectation interest be? 344.

Answer 5

B’s expectation interest is the value of the
monument to him, which, under the rule stated
in § 348(2)(b), would be measured by the cost of
completion, $6,000.

Question 6

A makes a contract with B under which A is to pay B
for drilling an oil well on B’s land, adjacent to that
of A, for development and exploration purposes.
Both A and B believe that the well will be
productive and will substantially enhance the value
of A’s land in an amount that they estimate to be
$1,000,000. Before A has paid anything, B breaks
the contract by refusing to drill the well. Other
exploration then proves that there is no oil in the
region. What should A’s expectation interest be? 344.

Answer 6

A’s expectation interest is zero.

Question 7

UCC Expectation Damages for Seller when Buyer breaches

Answer 7

(CONTRACT PRICE – MARKET PRICE) + (INCIDENTAL DAMAGES) - (EXPENSES SAVED )

Question 8

A contracts to pave B’s parking lot for $10,000. B repudiates the contract and A subsequently makes a contract to pave a similar parking lot for $10,000. A’s business could have been expanded to do both jobs. What should the damages be? 347.

Answer 8

LOSS VOLUME SELLER. Unless it is proved that he would not have undertaken both, A’s damages are based on the net profit he would have made on the contract with B, without regard to the subsequent transaction.

Question 9

UCC LOST VOLUME SELLER FORMULA

Answer 9

(LOST PROFIT) + (INCIDENTAL DAMAGES)

Question 10

UCC Expectation Damages for Buyer when Seller breaches

Answer 10

(CONTRACT PRICE – MARKET PRICE or COST OF BUYING REPLACEMENT GOODS) + (INCIDENTAL DAMAGES) + (CONSEQUENTIAL DAMAGES) - (EXPENSES SAVED AS A RESULT OF SELLER’S BREACH )

Question 11

A contracts to build a house for B, for which B
promises to pay $50,000 in monthly progress
payments equal to 85% of the value of the work
with the balance to be paid on completion. When
A completes the construction, B refuses to pay
the $7,500 balance claiming that there are
defects that amount to an uncured material
breach. Without defects, how can A recover? 374

Answer 11

If A builds the house without defects, she will

have a right to recover the $7,500 balance.

Question 12

A contracts to build a house for B, for which B
promises to pay $50,000 in monthly progress
payments equal to 85% of the value of the work
with the balance to be paid on completion. When
A completes the construction, B refuses to pay
the $7,500 balance claiming that there are
defects that amount to an uncured material
breach. If breach is immaterial, how can A recover? 374

Answer 12

If the breach is not material, A’s performance is
said to be substantial, and he has a claim under the
contract against B for $7,500; B has a claim against
A for damages because of A’s defects.

Question 13

A contracts to build a house for B, for which B
promises to pay $50,000 in monthly progress
payments equal to 85% of the value of the work
with the balance to be paid on completion. When
A completes the construction, B refuses to pay
the $7,500 balance claiming that there are
defects that amount to an uncured material
breach. If breach is material, how can A recover? 374.

Answer 13

If the breach is material, A’s performance is not
substantial and he has no claim under the contract
against B, although he may have a claim for
restitution damages under a theory of unjust
enrichment.

Question 14

A contracts to build a hotel for B for $500,000 and to have it ready for occupancy by May 1. B’s occupancy of the hotel is delayed for a month because of a breach by A. Is there cost avoided for B not having to operate the hotel substracted from the rent lost in B’s damages?

Answer 14

Yes. The cost avoided by B as a result of not having to operate the hotel during May is subtracted from the May rent lost in determining B’s damages.

Question 15

A contracts to build for B a factory of experimental
design for $1,000,000. After A has spent $250,000
and been paid $150,000 in progress payments, B
repudiates the contract and A stops work. A’s
expenditures include materials worth $10,000 that
he can use on other jobs. What are the reliance damages?

Answer 15

A can recover as damages the $90,000 balance of his

expenditures in preparation for performance.

Question 16

A contracts to sell his retail store to B. After B has
spent $100,000 for inventory, A repudiates the
contract and B sells the inventory for $60,000. What would the reliance damages be for B?

Answer 16

B can recover as damages the $40,000 loss that he sustained on the sale of the inventory.

Question 17

A gives B a “dealer franchise” to sell A’s products in
a stated area for one year. In preparation for
performance, B spends money on advertising,
hiring sales personnel, and acquiring premises that
cannot be used for other purposes. A then
repudiates before performance begins. Can B get his preparation expenditures as damages?

Answer 17

Yes. B can recover as damages his expenditures in preparation for performance.

Question 18

A contracts with B to stage a series of performances in B’s theater, each to have 50 per cent of the gross receipts. After A has spent $20,000 in getting ready for the performances, B rents the theater to others and repudiates the contract, and A stages the performance at another theater. A’s expenditures in preparation for performance of the contract with B are worth $8,000 to him in connection with staging the performances at the other theater. What can A recover in reliance damages?

Answer 18

A can recover as damages the $12,000
balance of his expenditures in preparation for
performance. 20k - 8,000.

Question 19

A, a carpenter, contracts to repair B’s roof for
$3,000. A does part of the work at a cost of
$2,000, increasing the market price of B’s house
by $1,200. The market price to have a similar
carpenter do the work done by A is $1,800. Is A’s restitution interest equal to the benefit conferred on B?

Answer 19

Yes. A’s restitution interest is equal to the benefit

conferred on B.

Question 20

A, a carpenter, contracts to repair B’s roof for
$3,000. A does part of the work at a cost of
$2,000, increasing the market price of B’s house
by $1,200. The market price to have a similar
carpenter do the work done by A is $1,800. What are the restituition damages for B if the work was not completed because of a breach by A?

Answer 20

$1,200 is appropriate. That benefit may be measured either by $1,200 increase in the market price of B’s.

Question 21

A, a carpenter, contracts to repair B’s roof for
$3,000. A does part of the work at a cost of
$2,000, increasing the market price of B’s house
by $1,200. The market price to have a similar
carpenter do the work done by A is $1,800. What are the restituition damages for A if the work was not completed because of a breach by B?

Answer 21

$1,800 - the reasonable value to B of A’s services in

terms of the $1,800 that s.o. else could have done it.

Question 22

A, a surgeon, contracts to perform a series of
emergency operations on B for $3,000. A does
the first operation, saving B’s life, which can be
valued in view of B’s life expectancy at
$1,000,000. The market price to have an equally
competent surgeon do the first operation is
$1,800. What is the restituion damage?

Answer 22

A’s restitution interest is equal to the benefit
conferred on B. That benefit is measured by
the reasonable value to B of A’s services in
terms of the $1,800 that it would have cost B
to engage a similar surgeon to do the
operation regardless of the rule on which
restitution is based.

Question 23

A, a social worker, promises B to render personal
services to C in return for B’s promise to educate
A’s children. A renders only part of the services
and B then refuses to educate A’s children. The
market price to have a similar social worker do
the services rendered by A is $1,800. Restitution damages?

Answer 23

If A recovers in restitution under the rule
stated in § 373, an appropriate measure of the
benefit conferred on B is the reasonable value
to B of A’s services in terms of the $1,800 that
it would have cost B to engage a similar social
worker to do the same work.

Question 24

A contracts to sell a tract of land to B for
$100,000. After B has made a part payment of
$20,000, A wrongfully refuses to transfer title. Restitution damages?

Answer 24

B can recover the $20,000 in restitution.

Question 25

A contracts to build a house for B for $100,000,
progress payments to be made monthly. After
having been paid $40,000 for two months, A
commits a breach that is not material by
inadvertently using the wrong brand of sewer
pipe. Are these restitution damages?

Answer 25

No. B has a claim for damages for partial breach
but cannot recover the $40,000 that he has
paid A.

Question 26

A, who holds a mortgage on B’s land, promises B
that he will not foreclose the mortgage for
another year, even if B makes no payments. In
reliance on A’s promise, B makes valuable
improvements. A forecloses in breach of his
promise and buys the land at a judicial sale for
the amount of the mortgage debt. Can B recover under restitution damages?

Answer 26

Yes. For the value of the improvements.

Question 27

A contracts to work for B for one month for
$10,000. After A has fully performed, B
repudiates the contract and refuses to pay the
$10,000. Can A get the $10,000 back?

Answer 27

Yes. A can get damages against B for $10,000,

together with interest, but not any more even if the house is worth more.

Question 28

A contracts to sell a tract of land to B for
$100,000. After B has paid the full $100,000, A
repudiates and refuses to transfer title. Can B get $100,000 back?

Answer 28

Yes. B has a right to $100,000 in restitution.

Question 29

A contracts to build a building for B in return for
B’s promise to transfer a tract of land to A and to
pay $10,000. After A has built the building, B
refuses to transfer title or to pay the $10,000. Does A have a right to the reasonable value of his
work and materials?

Answer 29

Yes, A has a right to the reasonable value of his

work and materials.

Question 30

A, a carrier, contracts with B, a miller, to carry B’s broken crankshaft to its manufacturer for repair. B tells A when they make the contract that the crankshaft is part of B’s milling machine and that it must be sent at once, but not that the mill is stopped because B has no replacement.

Because A delays in carrying the crankshaft, B loses profit during an additional period while the mill is stopped because of the delay. Is A liable for B’s loss of profit if it was not foreseeable by A to cause a shutdown of the factory?

Answer 30

No. A is not liable for B’s loss of profit. Not a foreseeable loss.

Question 31

A contracts to sell land to B and to give B possession on a stated date. Because A delays a short time in giving B possession, B incurs unusual expenses in providing for cattle that he had already purchased to stock the land as a ranch.

A had no reason to know when they made the contract that B had planned to purchase cattle for this purpose. Is A liable for B’s expenses in providing for the cattle if that loss was not foreseeable by A at the time the contract was made?

Answer 31

No. A is not liable for B’s expenses in providing for the cattle because that loss was not foreseeable by A as a probable result of the breach at the time the contract was made.

Question 32

A and B make a written contract under which A is to recondition by a stated date a used machine owned by B so that it will be suitable for sale by B to C.

A knows when they make the contract that B has contracted to sell the machine to C but knows nothing of the terms of B’s contract with C.

Because A delays in returning the machine to B, B is unable to sell it to C and loses the profit that he would have made on that sale. Was B’s loss of reasonable profit foreseeable by A at the time the contract was made?

Answer 32

Yes. B’s loss of reasonable profit was foreseeable by A as a probable result of the breach at the time the contract was made.

Question 33

A and B make a written contract under which A is to recondition by a stated date a used machine owned by B so that it will be suitable for sale by B to C. A knows when they make the contract that B has contracted to sell the machine to C but knows nothing of the terms of B’s contract with C.

The profit that B would have made under his contract with A was extraordinarily large because C promised to pay an exceptionally high price as a result of a special need for the machine of which A was unaware.

Because A delays in returning the machine to B, B is unable to sell it to C and loses the profit that he would have made on that sale.

Is A liable for B’s loss of profit to the extent that it exceeds what would ordinarily result from such a contract?

Answer 33

No. A is not liable for B’s loss of profit to the extent that it exceeds what would ordinarily result from such a contract.

To that extent the loss was not foreseeable by A as a probable result of the breach at the time the contract was made.

Question 34

A, a private trucker, contracts with B to deliver to B’s factory a machine that has just been repaired and without which B’s factory, as A knows, cannot reopen.

Delivery is delayed because A’s truck breaks down. Can the court exclude recovery for loss of profits?

Answer 34

Yes. In an action by B against A for breach of contract the court may, after taking into consideration such factors as: - the absence of an elaborate written contract
- and the extreme disproportion between B’s loss of profits during the delay and the price of the trucker’s services, exclude recovery for loss of profits.

Question 35

A contracts to publish a novel that B has written. A repudiates the contract and B is unable to get his novel published elsewhere. If the evidence does not permit B’s loss of royalties and of reputation to be estimated with reasonable certainty, can B recover damages for that loss?

Answer 35

No. If the evidence does not permit B’s loss of royalties and of reputation to be estimated with reasonable certainty, he cannot recover damages for that loss, although he can recover nominal damages.

Question 36

A contracts to supervise the production of B’s crop for $10,000, but breaks his contract and leaves at the beginning of the season. By appropriate efforts, B could obtain an equally good supervisor for $11,000, but he does not do so and the crop is lost. Can B recover for loss of his crop?

Answer 36

No. B’s damages for A’s breach of contract do not include the loss of his crop, but he can recover $1,000 from A.

Question 37

A contracts to buy from B a used machine from B’s factory for $10,000. A breaks the contract by refusing to receive or pay for the machine. By appropriate efforts, B could sell the machine to another buyer for $9,000, but he does not do so. Can B recover for the loss of the $10,000?

Answer 37

No. B’s damages for A’s breach of contract do not include the loss of the $10,000 price, but he can recover $1,000 from A.

Question 38

A contracts to buy grain from B for $100,000, which would give B a net profit of $10,000. A breaks the contract by refusing to receive or pay for the grain. If B would have made the sale to A in addition to other sales, B’s efforts to make other sales do not affect his damages. Would B’s damages for A’s breach of contract include his $10,000 loss of profit?

Answer 38

Yes. B’s damages for A’s breach of contract include his $10,000 loss of profit.

Question 39

A contracts to employ B for $10,000 to supervise the production of A’s crop, but breaks his contract by firing B at the beginning of the season. by appropriate efforts B could only obtain a job as a farm laborer at $6,000, but he does not do so and remains unemployed.
Will B’s damages for breach of contract include his $10,000 loss of earnings?

Answer 39

Yes. B’s damages for breach of contract include his $10,000 loss of earnings.

Question 40

On May 1, A contracts to sell to B a stated quantity of grain for $100,000, delivery and payment to be made on July 1. On July 1, A breaks the contract by refusing to deliver the grain, but B does not buy substitute grain on the market on that date although he could do so for $110,000. On July 10, B buys substitute grain on the market for $120,000. Will B’s damages for A’s breach of contract include the $20,000 above the contract price that he paid on July 10 OR the $10,000 from A?

Answer 40

B’s damages for A’s breach of contract do not include the $20,000 above the contract price that he paid on July 10, but he can recover $10,000 from A.

Question 41

A contracts to sell to B a used machine to be delivered at A’s factory by June 1 for $10,000. A breaks the contract by repudiating it on May 1. B makes a reasonable purchase of a similar machine for $12,000 in time to be delivered at his factory by June 1. It later appears that, unknown to B, a similar machine could have been found for only $11,000. Can B still recover $2,000 from A?

Answer 41

Yes. B can recover $2,000 from A.

Question 42

A contracts to sell his business, including land, buildings and stock in trade, to B. A repudiates the contract and B sues for specific performance. Can specific performance be granted, even for the stocks?

Answer 42

Yes. Specific performance of the entire contract may be granted, even though the stock in trade is of a kind that could be purchased elsewhere. However, in that case it is also within the court’s discretion to require A to convey the land and buildings and to pay damages for failure to deliver the stock in trade.

Question 43

A contracts to sell to B the racing sloop “Columbia,” this sloop being one of a class of similar boats manufactured by a particular builder. Although other boats of this class are easily obtainable, their racing characteristics differ considerably and B has selected the “Columbia” because she is regarded as a witch in light airs and, therefore, superior to most of the others. A repudiates the contract and B sues for specific performance. Can specific performance be granted?

Answer 43

Yes. Specific performance may properly be granted.

Question 44

A contracts to supply B with water for irrigation. In reliance on his contract, B sows his land with rice. A repudiates the contract although he has water that he can supply and B sues for specific performance. The loss that B will suffer as a result of A’s failure to supply water is difficult of estimation. Can specific performance be granted?

Answer 44

Yes. Specific performance may properly be granted.

Question 45

A contracts to sell B 10,000 bales of cotton. A repudiates the contract on the day for delivery. B can buy cotton on the market at a somewhat higher price. Will B be granted specific performance?

Answer 45

No. B will not be granted specific performance.

Question 46

A contracts to sell land to B, a dealer in land, who contracts to sell it to C. C plans to build a home on the land. B refused to convey the land to him. A repudiates the contract and refuses to convey the land to B and B sues A for specific performance. Can specific performance be granted for both B & C?

Answer 46

Yes. Specific performance will be granted.

Question 47

A and B sign a written contract under which A is to act in a play produced by B for a ten week season for $4,000. A term provides that “if either party shall fail to perform as agreed in any respect he will pay $10,000 as liquidated damages and not as a penalty.”

A leaves the play before the last week to take another job. The play is sold out for that week and A is replaced by a suitable understudy.

Is $10,000 reasonable for liquidated damages or a penalty?

Answer 47

The amount fixed is unreasonable in the light of both the anticipated and the actual loss and, in spite of the use of the words “liquidated damages,” the term provides for a penalty and is unenforceable on grounds of public policy.

Question 48

A, B and C form a partnership to practice veterinary medicine in a town for ten years. In the partnership agreement each makes an enforceable promise that if, on the termination of the partnership, the practice is continued by the other two members, he will not practice veterinary medicine in the same town during its continuance up to a maximum of three years.

Each also makes an enforceable promise that for breach of this duty he will pay $50,000 as liquidated damages.

A leaves the partnership, and the practice is continued by B and C. A immediately begins to practice veterinary medicine in the same town. B and C sue A for an injunction and damages.

Can B and C recover damages under the liquidated damage clause if they stop A from opening her practice?

Answer 48

NO. In spite of the liquidated damage clause, A will be enjoined from practicing veterinary medicine in violation of his promise not to compete.

B and C may not then recover damages under the liquidated damage clause but may recover damages for any actual loss caused by A’s breach, but not more than $50,000.

Question 49

A is employed as a school teacher by B. In breach of contract and without notice B discharges A by excluding him from the school building and by stating in the presence of the pupils that he is discharged. Can punitive damages be recovered for A?

Answer 49

No. Regardless of B’s motive in discharging A, A cannot recover punitive damages from B.

Question 50

A, a telephone company, contracts with B to render uninterrupted service. A, tortiously as well as in breach of contract, fails to maintain service at night and B is unable to telephone a doctor for his sick child. Can B get punitive damages?

Answer 50

Yes - under the additional tort.