Contracts I – Morris Spring 2010
· HAWKINS v. MCGEE
o Jury instructions – can pain and suffering be included in damages? What damages are appropriate?
o Plaintiff failed on negligence, but not breach of contract.
A – Post Surg. B – Pre Surg. C – 100%
· Expectancy Damages = C-A
· Reliance Damages = B-A
· Restitution would have been what Hawkins paid to Dr. McGee.
· SULLIVAN v. O’CONNOR
o No negligence by doctor, but there was breach of contract.
o Court relies on reliance damages as expectancy damages would prove too excessive and restitution is too low, differs from Hawkins.
o Big time damages for expectancy will limit doctors and make them more defensive.
· GROVES v. JOHN WUNDER
o Majority versus dissent – Majority = should be looked at like a construction contract, if it costs $60,000 to fix, then that is what the damages should be. However, dissent = that land is only worth $12,000, so how could damages be $60,000?
o Argument is breacher would escape liability of damages with the dissent’s opinion; however the majority puts more burdens on the breacher by holding them to what they promised in the contract – fixing the grade that was worth $60,000.
o Majority – reliance damages (puts party back to where it was before the contract breach).
o Dissent – restitution (plaintiff should not be able to gain more than what the property is worth, court wants to give damages to get party where it would have been had the contract been carried out).
§ Both majority and dissent are using the same measure = expectancy measure. (Majority just gets it wrong a bit.)
A B- Half House C-House
· Ugly Fountain Example – A agrees to build a fountain on B’s property that will reduce the value of the property, A pulls out a breaches, B sues for breach of contract – the restatement says the court should award the full value of the fountain to B had it been constructed.
o What’s the difference between this example and John Wunder?
§ Contractor Responsibility – Different reasons for entering into the contract in the first place. The agreeing parties would understand the nature of the agreement – i.e. that the fountain was for personal reasons and John Wunder was business related. The contractor is responsible and should have known the nature of the agreement to which he entered.
o Courts are trying to compensate for the damages they suffer – normal means would be to get the party to where it would have been had the contract not have been breached.
· ACME MILLS v. JOHNSON
o Johnson breached and did not deliver wheat to Acme Mills.
§ Mill recovered the price of sacks supplied to the harvester (80 dollars) – this is restitution and not because they breached the contract.
4/26 (1.03) 7/14 (1.15) 7/25 (.97)
· MISSOURI FURNACE CO. v. COCHRAN
o Under the UCC, Furnace is covered by §7-11 and §7-12.
§ Protection for “cover” is outlined in §7-11(1)(a) – See official note.
o The seller knows the buyer here is at risk of losing profits – can only recover if an effort if made to mitigate by finding cover (2-715(2)(a).
§ Judge what stood to be lost in profit versus what it cost to “cost” to cover damages (the preferred option that must be done reasonably).
o Was the new contract made in a “reasonable” fashion?
· NERI v. RETAIL MARINE CORP.
o Sellers remedies under the UCC – §2-708
o Breach of contract by the buyer – seeks to recover down payment back while seller counterclaims for damages –
§ §2-708(1) 12K – 7750=4250+1200= no real damages
· §2-718(2) – buyer has a right to restitution
· ILLINOIS CENTRAL R.R. CO. v. CRAIL
o Law is going to reflect what a reasonable person would do
o Goal of damages is to compensate the damaged party in a reasonable manner
o Start with expectancy, but if improper or insufficient then move onto reliance and restitution
o Expectancy problems: speculating profits
· CHICAGO COLISEUM CLUB v. DEMPSEY
o Proposition 1: Damages from lost profits from gate receipt.
§ $3,000,000 – $1,400,000 = $1,600,000
o Problems: Estimated damages are dependent on too many circumstances to be deemed appropriate to admit to the judge or jury – not reasonably ascertainable or able to be definite legal determinable.
§ “Compensation for damages for a breach of contract must be established by evidence from which a court or jury are able to ascertain the extent of such damages by the usual rules of evidence and to a reasonable degree of certainty…The performance in question is not susceptible of proof sufficient to satisfy these requirements; the damages, if any, are purely speculative…”
o During the injunction the plaintiff admits that their damages are incalculable (Indiana), but the case at hand is in Illinois and they have somehow ascertained the damages they are now seeking.
§ In hindsight, could the plaintiff tried to get an injunction in Pennsylvania based on the Indiana injunction? They could have tried, but it is unlikely a judge would have turned down a title fight within his jurisdiction.
o Proposition 2: Expenses incurred prior to signing of contract.
§ General Rule: an action for breach of contract a party can recover only on damages which naturally flow from and are the result of the act complained of.
§ Wills contract was NOT contingent on Dempsey contract – speculation sufficed on securing the Dempsey contract
§ “Any obligations assumed by the plaintiff prior to that time are not chargeable to the defendant.”
§ Wills never even received the $50k, and even if he did, it would not be chargeable to Dempsey.
§ Plaintiff committed to paying Wills 10 days before the fight was to take place
o Proposition 3: Court costs from injunction
§ Such damages for enforcing the contract are not recoverable
§ Took such a financial risk choice at own risk
§ Nothing in the contractual agreement that spoke to attorney’s fees
§ After the breach, plaintiff engaged in Indiana litigation at own risk
o Proposition 4: Expenses after signing and before breach
§ Weisberg to be reimbursed from gate receipts
§ However, nothing in contract to charge plaintiff unconditionally with the costs and expenses of Weisberg’s services.
o Court’s determination of damages
§ Payment of $10 (restitution) to Dempsey and $300 to Solider Field stage architect for fight – sufficient to go to jury
§ No damages for wages paid to employees of plaintiff – not a naturally flowing expense from the contract
§ Expenses to have Dempsey undertake his insurance physical is recoverable
§ Efforts to accommodate rail travel for publicity and special trains and accommodations are recoverable as well
o Expenses incurred between contract commencement and breach is recoverable if they are in furtherance of the contract.
· ANGLIA TELEVISION LTD. v. REED
A K B
No Reliance Reliance
· Plaintiff received both damages – differs from Chicago Coliseum
· Which is more correct? Why did Anglia receive
e crankshaft needed to be replaced, the court finds that absent some express or implied agreement in the contractual language, mere knowledge of gain/loss or profits by buying party is not enough to hold breaching party liable – they must assume liability for damages that could occur.
o Should the shipping company assume the mills loss of profits from a 2 pound shipping contract?
o Normal v specific foreseeability
· Limitation on Damages: Must be able to prove damages to a reasonable degree of certainty, expectancy damages are more difficult to prove, and damages can only be sought for foreseeable damages.
· Freedom of contract means not only the freedom to enter contracts, but also the freedom to breach it.
· VALENTINE v. GENERAL AMERICAN CREDIT, INC.
o Plaintiff sued after losing a job for emotional distress from the loss of job security.
o The court reasoned that she could not collect given the contract for employment was entered not for personal reasons, but for economic reasons.
§ Logic follows the Hadley rule – personal damages do not naturally flow from an employment contract. Personal distress had to be a “particularly likely result.”
o When parties make the contract, is it foreseeable that emotional distress will occur? – For an employment contract, it is probably not foreseeable someone will be fired and thus negatively affected.
o Contract in the first place must be meant to secure a personal interest to collect emotional distress damages – not economic. So, following that logic, for damages to get the non-breaching party to where they would be had the contract been fulfilled, it only would have been foreseeable to collect damages to the nature of the contract as originally agreed.
o What’s the problem with giving everyone emotional/mental distress damages?
§ Bad policy for contract breaching – claims would constantly arise and it would be constant litigation for the collection of emotional damages from contract breaching.
o At the time of the deal, what was foreseeable? Emotional damages may be foreseeable, but the negative consequences from adopting these damages would far outweigh the benefits (Collateral ill-effects).
· HANCOCK v. NORTHCUTT
o Even though Alaskan courts have given damages heavily for breach of housing construction damages, they are still unwilling to give emotion/mental damages for breach of construction contracts for houses.
§ “Breach of house construction contract is not so highly personal and laden with emotion as contracts where emotional damages have typically been allowed to stand on their own.”
· MINDGAMES v. WESTERN PUBLISHING CO.
o Plaintiff wants a considerable amount of lost profits from a breach of contract that seems highly exaggerated.
o Court employs the “new business” rule – that which bars lost profit damages because they are unascertainable for a new business of this nature.