Contracts II Gerla Fall 2015
DAMAGES
Generally, no punitive damages because the goal is not to punish breach, simply make it right and prevent unjust enrichment. Exception is handling a corpse or repairing a part of the body
Expectation Interest: an amount intended to put P in position as if K had been performed. The damages are what they would have profited from the K.
Difference between what was promised and what was received.
Therefore, a losing K would be irrelevant because they would not have made anything.
Reliance Interest:
Putting injured party where he was before agreement
Restatement 347
Injured party has damages based on his expectation of interest as measured by
a. the loss in value caused by other party’s failure or deficiency in purpose PLUS
b. any other loss (incidental or consequential) caused by breach MINUS
c. any cost or other loss he has avoided by not having to perform
P is to recover any expenditure made by him on reliance of K AND any other detriment (foreseeably) by D breaching promise
Expense must be within contemplation of party when the K was signed AND cannot be greater damages then K price
What if the K price is 10k, and 12k would be taken to get it done?
They spent 5, have been paid 3k, still 2k in the hole.
If the K price was 10k and the actual cost was 12k, then the K was a losing K by 2k. Since they’re 2k in the hole, and would have lost 2k anyway, it’s a wash, no damages.
When do reliance damages start:
After the K is formed, cannot recover for before
If the person IN BREACH can prove that it’s a losing contract BY CLEAR AND CONVINCING EVIDENCE, then must subtract the amount of loss from damages recovered.
If they cannot figure out which is true, then the party with the burden of proof loses
FORMULA!
Unpaid profit= K price- Cost of perf. Spent- amount already paid
THEN
Unpaid profit +
Reliance Costs +
Other losses –
Loss Avoided=
Reliance damages
Restitution Damages
An amount from any benefit conferred by P on D in performance of K disrupted by D
Implied in fact: past dealings of parties (intention and conduct determine)
Implied in law: quasi K imposed on parties- one party has benefitted from the other in a way that would be unjust enrichment if not paid for
NOT limited to K price UNLESS between an attorney and client and does NOT take into account a losing K
Exceptions: If the K price is met, but the fair market value is higher, then there’s no restitution IF ALL AT QUESTION is money
Attorney Exception: reasonable value of services limited by K price. IF entirely based on contingent fee, then reasonable value of services.
None available for a gift giver or an officious intermeddler
Restitution can be used:
1. as an indy theory of recover when no enforceable K
2. as an alternative to damages or indy remedy for a party NOT in breach of enforceable K
3. As an indy remedy for a party who has breached K
4. As an indy theory of recovery when K is unenforceable
Quantum Meruit:
Used when no K
“As much as one deserves”
Requires complete performance to bring suit
Test: value of services rendered to D’s benefit (NOT the value of the benefit received)
Elements:
1. Person receives benefits
2. Other person acts with expectation of compensation
P must prove how he benefitted from D, and must have clean hands- must be innocent from knowing of problem with K before proceeding
IF a non breaching P, then the D may recover for reasonable value of services LESS the costs incurred by P becaus
Most likely diminution in market value
Limitations on Damages
General Damages: Incidental (Do not need to be foreseeable)
Special Damages: Consequential (must be foreseeable at time of K)
Consequential: costs or loss P would not have incurred BUT FOR the breach (any damages caused by breach)
Subject to limitations:
Certainty- must be proved with reasonable certainty
Foreseeability- damages must be reasonably foreseeable
Avoidability- damages must be avoided if possible
Incidental:
Consequential damages incurred trying to prevent breach
Reasonable Foreseeability- AT THE TIME OF K FORMATION, NOT AT THE TIME OF BREACH
The damages must be reasonably foreseeable
New Business Rule: If you can’t prove the damages with reasonable certainty, then it’s difficult to prove the amount of damages. They have to prove the damages which may be hard with no record, but they can try.
Carrier Damages: they are responsibly for not delivering package on time if they KNEW or SHOULD HAVE KNOWN the consequences of the late package. If they did not know, you cannot recover for loss in profit, but may recover for the difference in what was paid for and what was received (3 day shipping paid for, 7 day shipping received).
Basic measure of damages?
The difference between value of what was agreed on and what was received. This does not have to be reasonably foreseeable
