CHAPTER 1: BASES FOR ENFORCING PROMISES
THE MEANING OF ENFORCE
1. Economically Efficient Breach/Economics of Remedies
Contract won’t be as beneficial as they had thought;
Might be more profitable to breach than to perform,
Assumes you can accurately presume the costs of breaching vs performing
Naval vs. Berkely
Damages for breach of contract are generally measured by a plaintiff’s actual loss
Would need to assume that paying $40,000 to Naval would stop them from suing—while they could sue anyway—biggest risk—they need to make sure there profits will be more than what they are going to have to pay out
Requires admission of breach
The amount is Berkley’s estimation of what Naval would lose—Naval would want more, especially if they know Berkley is willing to pay
Berkley can’t count on Naval’s agreement, could use check as proof of breach—can’t count on not having to pay for litigation
Naval claims there are entitled to all Berkley’s profits—claming copyright infringementàviolator of copyright law has to pay any profits they made from violating copyright—profit attributable to infringement
under contracts breach, Naval is entitled only to actual damages, what you expected to receive had contract been upheld
The difference between what Naval lost and Berkley gained.
Naval actually lost profits from hardcover sales by having to compete with paperback sales—Naval’s actual loss
no copyright infringement, Naval is entitled to actual damages—expectation if contract had been upheld
court says uncertainty in hypotheses should be in favor of injured party
2. Damages
Court will not order specific performance if monetary damages are adequate. Except:
Sale of land
Sale of business
You can only receive what is foreseeable—some is too speculative
Expectation damages—to put you in the position you would be in had the contract been performed
Restitution damages—any money conferred upon defendant in anticipation of fulfillment of the contract
Reliance interest—to put plaintiff in position they were in just before entering the contract
i. An act other than a promise OR
ii. A forbearance OR
iii. The creation, modification, or destruction of a legal relation
The performance or return promsie may be given to the promisor or to some othe rperson. It may be given by the promisee or by some other person.
§ Restatement 75: Promise for Promise
a. A promise which is bargained fo ris consideration if, but only if, the promised performance would be consideration.
Restatement section 17: We enforce bargains where there is mutual consideration and mutual assent.
Restatement 79: gets rid of requirement of benefit/detriment
Performance is induced by promise
Bargained for promise:
Bob’s return promise was bargained for if it was sought by Ann in exchange for Ann’s promise
What kind of performance is acceptable?
an act other than a promise
