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Contracts
University of Florida School of Law
Hurst, Thomas Robert

CONTRACTS – SPRING 08’

Remedies for Breach of Contract
1) Restitution
i) To describe the interest of a party in recovering values conferred on the other party through efforts to perform a contract.
ii) The goal is to prevent of gain by the defaulting promisor at the expense of the promise – “the prevention of unjust enrichment”
2) Reliance
i) Describes a party’s interest in recovering losses suffered by virtue of reliance on the contract, whether of not there was a corresponding gain to the opposite party
ii) Often difficult to prove and when proved it may be difficult to measure
3) Expectation
i) Describes the interest of a party in realizing the value of the expectancy that was created by the other’s promise

Goals of Contract Damages
1) The basic goal of contract damages is to place aggrieved parties in the same economic position they would have achieved had their contracts been fully performed. The aggrieved party is entitled to the benefit of the bargain
i) Hawkins v. McGee (“case of the hairy hand”)
(a) Contract damages restore a plaintiff to the position he would have occupied had the defendant performed.
(b) The purpose of damage awards is to restore the plaintiff to the position he would have occupied had the contract been fulfilled.
(c) Assumpsit: A common law action for breach of a promise or for breach of a contract.
(d) Incidental Damages: Losses reasonably associated with or related to actual damages.
(e) Nonsuit: A court’s dismissal of a case or of a defendant because the plaintiff has failed to make out a legal case or to bring forward sufficient evidence.
ii) Groves v. John Wunder Co.
(a) In a construction case, the correct measure of damages is the cost to the Plaintiff of remedying the defect in the defendant’s performance.
(b) Court ruled that the correct measure of damages is the cost of remedying the defect in the defendant’s performance. It does not depend on the variation in the value of the property.
(c) Dissent said that it would be Economic Waste: Spending more money to restore land when the value of the land is far less.
(d) The case is about Expectancy Damages.

iii) Restatement of Contract and Torts:
(a) First off: this is influential but not binding
(b) Tort looks at the damage caused, Contract law looks at what it costs to complete the contract
(c) Tort looks at damages from a market value point of view
(d) Contract looks at damages from the individuals value point of view
(e) Most of the time you can’t justify the injustice in tort law compared to contract law because otherwise it would open up a floodgates of arguments for everyone getting injustice
(f) Specific performance is logical but just not feasible for Anglo-American law
(g) Contract law usually doesn’t award punitive damages
iv) Valuable Info:
(a) No Person can recover a greater amount in damages for breach of an obligation than he would have gained by the full performance thereof on both sides.
(b) In some cases, such as where the property is held solely for investment, the court may conclude as a matter of law that the damage award cannot exceed the diminution in value. However, the property has special significance to the owner and repair seems likely the cost of repair may be appropriate even if it exceeds the diminution in value.
(c) While the law of contracts gives to a party to a contract as damages for its breach an amount equal to the benefit he would have received had the contract been performed.
(d) The law of torts attempts primarily to put an injured person in a position as nearly as possible as nearly as possible equivalent to his position prior to the tort.
(e) If there is an Estoppel it builds a stronger case for the party; Estoppel can be only invoked where a party by his conduct has led another to act to his prejudice.
v) Acme Mills & Elevator Co. v. Johnson
(a) Damages for breach of a personal property contract are based on the value of the property at the time of delivery.
(b) In contracts for the delivery of personal property at a fixed time and at a designated place, the vendee is entitled to damages based on the difference between the contract price and the market price of the property at the place and time of delivery.
(c) Awarding expectation is surest way or protecting reliance interest where reliance may be difficult to prove
vi) Louise Caroline Nursing Home, Inc. v. Dix Construction
(a) Cost of completion is the appropriate measure of damages for a partially completed.
(b) In the case of a failure to complete a construction contract, damages are determined from the reasonable cost of completing the contract and repairing any defects in the partial construction, reduced by any amounts not paid under the contract.
(c) Benefit-of-the-Bargain Rule: the principle that a party who breaches a contract must pay the aggrieved party an amount that puts that person in the same financial position that would have resulted if the contract had been fully performed.
(d) Compensatory Damages: Damages sufficient in amount to indemnify the injured person for the loss suffered.

Limitation on Expectation Damages
i) Rockingham County v. Luten Bridge Co.
(e) Established Nonbreaching parties must attempt to mitigate their damages
(f) Upon receiving notice that an executory

can contract a new forward contract in a case involving a breach, the Defendant cannot be held liable for the high rates the Plaintiff paid to a new party contracting a forward contract.
(d) Forward contract: An agreement to buy or sell a particular nonstandardized asset (usually currencies) at a fixed price on a future date. Unlike a futures contract, a forward contract is not traded on a formal exchange.
(e) UCC 2-610, 2-723, 2-711, 2-712 through 2-715, 2-703, 2-706, 2-708, 2-709, 2-710.
iv) Neri v. Retail Marine Corp.
(a) A seller may recover its lost profits and incidental damages for breach of a retail sales agreement
(b) Where buyer breaches, seller can recover lost profits only if shown that he has unlimited supply of goods so that no effective mitigation by reselling goods promised to buyer is possible. Basically, it is in effect an expectation to the general duty to mitigate where a lost sale occurs.
(c) Under Article 2 in the Uniform Commercial Code (UCC), a retail dealer may recover loss of profits and incidental damages upon the buyer’s repudiation of its contracts.
1. UCC 2-708, 2-710, 2-718, 2-709.
(d) Statutory provisions provide for the retailer to receive the anticipated profit from the lost sale and compensation for the extra costs it had to incur until a new buyer could be found.
v) Hadley v. Baxendale
(a) Limits expectation damages to those either reasonably foreseeable at the time contract signed or those called to breaching party’s attention at time contract signed. UCC 2-715.
(b) Lost profits are awarded only when both parties expected them to be possible elements of damages
(c) Lost profits are not recoverable unless both parties are made aware that they will be sought as part of the damages in the even of a breach (foreseeability)
(d) Damages include costs that the other party should have expected would follow.
(e) If special circumstances existed that the other party was aware of, damages related to those special circumstances would be an element of the damages, too.
1. However, if those “special damages” were known only to one party, they are not recoverable.