Select Page

Contracts
Rutgers University, Newark School of Law
Hyman, Wilton B.

Contracts Outline

1.      Remedies for Breach of Contract
A. Expectation Damages
A.      The fundamental goal of the remedy for breach is giving the victim of the breach exactly what was promised and justifiably expected
B.      The law prefers money equivalent of expectation to specific performance
C.      Formula for recovery = Gross profit + reliance- payments + other loss
D.      If a substitute if taken in place of the breach the victim can sue for the difference between the replacement and the market value if they took a reasonable replacement
1.      UCC 2-712 (Seller Breach) – Buyers may cover by making a purchase of substitute goods and have damages from seller equal to the difference between the cost of cover and the contract price.
2.      UCC 2-706 (Buyer Breach) – Seller may resell those goods to other buyers in a commercially reasonable manner and claim damages equal to the difference between contract price and resale price
a.       Codes aim is to put the injured seller in as good a position as he would have been in if the buyer had accepted the goods and paid the price called for by contract.
E.      Peevyhouse v. Garland Coal – P owned farm containing coal deposits. Leased it to defendant for 5 years for the purpose of strip mining. P’s insisted on restoring the beauty of the property after the work. D refused to restore property. It would cost 29,000 to perform restoration, and there would only be a 300 difference in the property worth. The farm is only valued at 5,000
1.      Held – Only 300 should be awarded.
a.       The principal of the remedial work was incidental to the contract, it was not the main purpose
b.      Economic waste would be involved in enforcing the 29,000 performed. (If the values were closer like 30,000-20,000 there would not be economic waste)
B. Alternative To Expectation – Substitution as Mitigation
– An injured promise cannot recover damages for losses that, with reasonable effort, he could have avoided after the promisor’s breach became known. The injured party is under a legal duty to take reasonable steps to minimize the cost of breach.
F.      Parker v. 20th Century Fox
1.      Issue – Did Parker act reasonably in mitigation when she refused to do the alternate movie Fox proposed?
a.       P

                                       i.      You are bound to seek employment, just not inferior kind. Radio is not inferior in this case
b.      The Exception – “Lost Volume” Seller
A.      Neri v. Retail Marine – Neri contracted with Retain Marine eventually made a deposit of 4,250. Medical problems came up and Neri breached the contract. Retail refused to return the deposit. Neri eventually got back the 4250 but had to pay the lost profit of 3,253 and damages of 674 dollars to Retail Marine.
1.      The fact that Retail Marine resold the boat is not adequate. Because it had a large stock they could have sold two boats instead of one, so the breach reduced the volume of sales. The seller is then entitled to recover its full profit expected under the breached transaction. UCC 2.708 (2)
a.       Seller can also recover incidental fees 2.710, but not attorney fees
Under the UCC a retail dealer may recover loss of profits and incidental damages upon the buyers repudiation of a contract.