Chapter 1. The Legally Enforceable Promise: Basics and Recurring Themes
Section 1: The Goals of Contract Law
1. General Goal: The purpose of awarding damages for breach of contract is to put the plaintiff in as good of a position as he would have been had the defendant kept his contract. (Hawkins)
2. Construction Contract Goal: When a construction contract is defectively performed then the measure of damages is the cost of remedying the defect. (Groves)
3. Purchaser’s Remedy: The measure of damages for a purchaser in a sales contract is the difference between the contract price and the market price at the time and place of delivery. (Acme Mills)
a. Difference between paid and contracted price.
4. Purchaser’s Remedy: The measure of damages for an aggrieved buyer in a sales contract is the difference between the contract price and the marker price at the time and place of delivery. (Missouri Furnace)
5. Seller’s Remedy: A seller may recover his lost profit from a sales contract when the buyer defaults on the purchase if the contract-market differential measure of damages is inadequate to put the seller in as good a position as if performance would have been done. (Neri)
6. Injury Goal: Compensation for injury suffered must be based on actual loss. (Illinois RR)
7. Foreseeability: In an action for a breach of contract a party can only recovery on damages those which naturally flow from and are the result of the act complained of. (Chicago Coliseum)
8. Preparation: A promisee may recover his cost in preparation for performance of a contract, subject to the promisor’s right to reduce it by as much as the promisee would have lost if he contract had been performed. (L. Albert & Sons)
Ch.1, Section 2: Limitations on the Compensation Principle
1. Mitigate Damages: When an aggrieved party receives notice of a major breach by the opposing contracting party then the aggrieved party acquires an immediate duty to reasonably mitigate damages. (Rockingham County)
2. Employment: Projected earnings from other employment opportunities only offset damages if the employment is substantially similar to that of which the employee has been deprived. (Parker)
3. Foreseeability: The injured party may recover either those damages as may reasonably be considered arising naturally from the breach itself or may recover those damages as may reasonably be supposed to have been in contemplation of the parties, at the time they made the contract, as the probable result of a breach of it. (Hadley)
a. Damages can be either (1) natural consequential damages, or (2) those that the parties contemplated while making the contract. But if these special circumstances were never communicated then only natural consequences will be accepted.
4. Mere notice to a seller that a buyer has to take certain action to prepare for performance is not enough as a matter of law to charge the seller with special damages related to the preparation if the seller breaches. (Globe Refining)
5. Mental Distress: Mental Distress damages are not recoverable in an action for breach of an employment contract. (Valentine)
6. Lost Profits: A claim for damages for lost profits is excessively speculative if it not supported by evidence that would allow a rational trier of fact to believe that enough units of the product would have been sold to yield the amount of lost profits claimed as damages (Mind Games)
Ch.1, Section 3: The Restitution Alternative
1. Partial performance under an otherwise unenforceable contract gives rise to recovery only where the other party was benefited thereby. (Boone)
2. A subcontractor in a breached construction contract may sue in quantum meruit for services rendered. (US v. Algernon)
Quantum meruit – equitable doctrine allowing recovery for labor and materials provided by one party, even though no contract was entered into, in order to avoid unjust enrichment by the benefited party.
3. Where labor is performed under a contract for a speci
ormance – An equitable remedy whereby the court requires the parties to perform their obligations pursuant to a contract.
Chapter 2. The Domain of Legally Enforceable Promises
Section 1: Introduction
1. Promise: An oral promise to donate money is unenforceable. (Congregation Kadimah)
a. A gratuitous promise to do or give something to another, without any benefit accruing to the promisor, lacks the element of consideration, and therefore no contract has been entered.
i. Justifiable detrimental reliance may constitute consideration.
b. An attempt to enforce an oral promise after the promisor’s death would be very much like attempting to enforce an oral will, a situation wide open to fraudulent claims.
i. Virtually all states require wills to be written.
Ch.2, Section 2: The Bargained for Exchange
1. Forbearance from a lawful act at the request of another is sufficient consideration for a contract. (Hamer)
A valuable consideration in the eyes of the law may consist either in some right, interest, profit or benefit accruing to the one party; or some forbearance, detriment, loss or responsibility given, suffered or undertaken by the other party.
i. Courts do not care whether or not the thing promised does in fact benefit the promisee or a third party or is of substantial value to anyone.
It is immaterial whether the forbearance would have been undertaken