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Contracts
St. Thomas University, Florida School of Law
Makdisi, John Mary

Contracts (definitions)

Restitution: A restoration to the plaintiff of any benefit the defendant may have gained from the misconduct. The measure of recovery is the amount of the unjust gain or enrichment. This is usually given by monetary award.
· i.e. You contract someone to build a bridge for 100,000. You lay out 5,000 as a down payment. The contractor decides not to build the bridge. You get back 5,000.

Expectation Damages: The main purpose is to supply an award of money to an aggrieved party to compensate for any loss or injury and to put the non-beaching party in as good a position as performance of contract duties would have done. To give the benefit of the bargain to the breached against party.
· i.e. You contract someone to build a bridge for 100,000. The value to you is 50,000. Your total profit or net value will be 50,000 after the bridge is done.

Reliance damages: Based on the cost to the promisee of his reliance on the promise. These put the party in a position he would have been in had the contract not been entered into at all. They include damages for preparation of contract performance. They are not allowed to exceed expectation damages.

Consequential damages: Damages that were reasonably foreseeable at the time of contracting, of which the breaching party did or should have had knowledge.

Incidental damages: those costs incurred in finding a substitute performance, even for unsuccessful attempts.

Nominal Damages: These damages are awarded when the plaintiffs’s rights are violated but bo measurable or actual loss is sustained. This is merely a declaration that rights have been wrongfully infringed. All breaches of contract give rise to nominal damages regardless of the actual loss.

DAMAGES

Reliance

Sullivan v. O’Connor
P sues over a nose job gone wrong. P tried to claim that the expectation value was the jobs that she would have obtained.

Rule: 1) You give reliance when expectation is to difficult to figure outthe further you get from a commercial setting the more difficult it is to apply expectancy damages.
2) Speculation is not enough for expectation.

Substitute value
(the value to the person, the amount of money needed to buy what is of value to them and/or diff in value between cotract and present state)

Hawkins v McGee (Harry Hand)
Doctor induced the patient to have a surgery after garuanteeing 100% good hand.

Rule: Contracts are external, the subjective intent of the parties does not matter.
· Value of the hand after the operation (worse than before) minus the promised hand
· The cost of the operation is not included in expectation damages if the P knew he would have to undergo the operation anyway.

HYPO- Hand was worth 20,000 before the operation and 10,000 after. The Promised hand was worth 50,000. Expectation value is 40,000. Difference between the current state of the hand and the promised hand.
If it would have been reliance damages it would have put him back to where he was before. It would have been 10,000. Hand before 20,000 – hand after 10,000 = 10,000.

Peevyhouse v. Garland Coal & Mining Co.
Contractor fails to return the land to its promised state..

Rule: The cost of completion here is limited to the current market value and the value after the work is done because the cost of completion (29,000) is greatly out of porportion with the total value of the land after the work would be completed (300). It would take 29,000 to improve the land to 300. It is not like groves because the main goal of the contract was not to return the land to its original state. It was to extract the coal (primary) and then return the land to normal.
C Unlike groves the majority opinion believed that the land value was a secondary value. They did not take into account malicious intent.

Laurin v. DeCarolis

C The willful breach of contract causes the wrongdoer to pay the value of the wood or coal severed from the soil.
C The value of the gravel as it lies in the soil and not in trucks is the measure of damages.
C Not punitive; it disables the defendant from making a profit off of his wrongdoing.
C Not Conversion- Conversion is to transform the property into a new form. For this ownership is required. The land/gravel was not owned.
HYPO
If the contractor would have sold the gravel to a specialized person that only he knew than the contractor would have been able to keep the profit. But in this case the owner had the ability to sell the gravel on his own.

Expectation (cost of completion element)

Groves v. John Wunder Co.

Rule: Where there is a willful and fraudulent breach of contract the difference in market value is not included. The contractor cannot breach willfully and fraudulently breach the contract and at the same time keep the profit made from the contract.
C The land has a specific and unique value to the P. He should be granted the right to have his contract for filed.

Ugly Fountain

Rule: The damages for expectation under cost of completion are: The cost of completion less the part of the unpaid price. The money needed to complete the project

i.e. Contract is worth 5000. The contractor stops work after having been paid 2,800. The cost to complete the contract is 4,000. You get 5,000(cost of project)- 2,800 (price paid) =2,200. How much more would it take to complete the project? 4,000- 2,200 = 1,800.

Acme Mills-

C Efficient Breach of contract- The best economic policy in which no one loses. Promotes economic expansion.
C Falls into its own category. The

at the time of breach.

§2-712(1) says: After a breach . . . the buyer may “cover” by making in good faith and without unreasonable delay any reasonable purchase of or contract to purchase goods in substitution for those due from the seller.
1. Terminology: to cover is, as the section explains, simply to buy substitute goods. Cover has to be reasonable. As the “Official Comment” to §2-712 says: “The test of proper cover is whether at the time and place the buyer acted in good faith and in a reasonable manner.”

UCC 2-713(1)
If the buyer does not cover, he may recover the difference between the contract price and the market price at the time when the buyer learned of the breach.

UCC 2-610
This ensures that the repudiatee attempt to minimize the damages suffered. Similar to the duty to mitigate rule except that it states a repudiatee may “ for a commercially reasonable time await performance by the repudiating party. If the repudiatee awaits performance beyond a comercially reasonable time he cannot recover damages which could have been avoided.”

Missouri Furnace Co v Cochran (application of 2-712)

Plaintiff contracted with Cochran for the pirchase of coke to be delivered on a certain date. When the contract was canceled the buyer went and bought from another dealer for a much higher rate. The court found that he did this to his own determent because he took the risk of buying at a higher rate then the contract originally stipulated.
C The The measure of damages will be estimated by the value at the time each delivery should have been made.
C D should not have to be responsible for a forward contract (a contract made after the breach) gone wrong.

Lost profits and incidental damages recoverable
UCC 2-708
A seller may recover lost profits and incidental damages when the buyer repudiates a sales contract and the seller then resells to another buyer.
C Example- (Neri v. Retail Marine Corp.) P contracts with D for the sale of a boat with a down payment of 4,250. D later rescinds the contract because of anticipated medical expenses. P can recover for the loss of profits even though he was able to sell the boat to another buyer because he would have made two sales instead of one.