Remedies: expectation damages Flashcards
Reasonable certainty
Expectation damages must be proven with reasonable certainty.
Duty to mitigate
An injured party is expected to make reasonable efforts to mitigate the loss resulting from the other party’s breach.
Duty to mitigate: comparable employment
In the case of a wrongfully discharged employee, the employee is expected to accept an offer of comparable employment.
If the employee fails or refuses to do so, the employee’s recovery is reduced by the amount of the loss that the employee could have avoided by accepting comparable employment.
General and incidental damages
The injured party party can seek losses that almost anyone would incur in a breach, e.g., the costs of:
(1) Storing rejected goods;
(2) Finding a new buyer;
(3) Finding a replacement vendor.
Lost profits
A volume seller may be able to recover lost profits, although she was able to resell the goods or services, if she sells that type of good or service all the time.
Incomplete performance
If, for example, a paying party repudiates a partially performed building contract, the builder must cease building.
Her recovery would be the contract price less amounts paid and the cost of finishing the job.
Diminution in market value
The diminution-in-market-value approach may apply if cost-to-complete damages would result in a windfall for the plaintiff, i.e., “economic waste.”
For diminution in market value to apply, however, the breaching party must have acted innocently and unintentionally.
Consequential damages
Consequential damages must be reasonably foreseeable by the breaching party in order to be recoverable.
Damages are considered foreseeable if:
(1) they were the natural and probable consequences of breach; or
(2) if they were “in the contemplation of the parties at the time the contract was made” (Hadley v. Baxendale).
Avoided expenses
If the nonbreaching party avoids specific costs because a breach has occurred, those costs are subtracted from any damage award.
