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Contracts
University of Florida School of Law
Hurst, Thomas Robert

Contracts
1/7/08
·         Remedies – client-centered approach
Hawkins v. McGee
·         Guy had operation to remove scar tissue and doc promised to make hand 100% but didn’t
·         Tort action dismissed
·         P got jury verdict for $3,000, D filed motion for nonsuit, trial ct upheld jury verdict if P agreed to decrease damages to $500
o    Judge thought jury verdict was too high
·         P objected to remittitur
·         Dispute over what doctor promised
·         Jury found that D promised to make hand 100%
·         Nowadays docs don’t promise anything so as to avoid a K COA
·         Are we just penalizing doctor for reassuring patient?
o    But ct took doc’s words literally
·         Upper ct: no $ for pain and suffering               
o    Reversed lower ct b/c patient went in knowing that there would be pain and suffering
o    P & S would have occurred whether or not operation was successful
·         Ct: damage recovery diff b/w what was promised and what was performed
·         Expectancy – P’s gain expected from performance
·         Reliance – P’s unit of out of pocket losses
·         Restitution – P’s losses which result in D’s gain à unjust enrichment, usu. a tangible, monetary benefit
·         Expectancy is the normal rule of dmgs
1/8/08
·         Restitution – P loss à D gain
·         Reliance: P loss à D no benefit
·         Expectancy: P’s lost benefit from K à D no change
Hawkins v. McGee
·         Expectancy dmgs
o    Value of hand before surgery = X
o    Value of hand after surgery = X – $1000
o    Value of hand if operation successful = X + ?
·         Value of hand wrt profession is speculative b/c earnings vary widely
Sullivan v. O’Connor
·         No expectancy dmgs b/c P could obtain work after operation
·         Expectancy dmgs difficult to prove so just have reliance dmgs
·         Reliance dmgs – compensate P for out of pocket losses + P & S b/c recovery is for 2nd operation b/c 1st one was botched
·         Expectancy dmgs don’t always max P’s recovery
·         Theories not mutually exclusive
Groves v. John Wunder Co.
·         P owned gravel plant and leased its plant to D to screen gravel and smooth it out but instead D just took it
·         Cost of completion (regarding) = $60,000
·         Diff in value of land before and after mining gravel = $12,000
·         P appeals award b/c its too small
·         Trial ct assumed land had no value
·         Trial ct’s $12,000 award is an expectancy figure and app ct’s $60,000 award is also an expectancy figure
·         Expectancy dmg – make P whole again
·         Cost of completion (P) v. diff in value (D)
·         $12,000 not reliance b/c no out of pocket expenses
·         App ct awards $60,000 b/c willful breach, P needs $60,000 to get what was promised
·         It is rare to force D perform what was promised unless money not enough
·         Cost of completion rule used in public contracts
·         Dissent: cost of completion cases in public works not applicable here
·         D: $60,000 is economic waste when value added is $12,000
·         Econ waste not relevant here, case of redistrib of $
·         P’s arg: this case is like ugly fountain à even if fountain is ugly, would still reimburse P if K’or didn’t finish his job b/c maybe P believe in future of Twin Cities
·         Torts only distinguishable à torts looks at dmgs not cost of completion
1/9/08
Groves v. John Wunder
·         In torts, dmgs measured by mkt value of the property, in contracts, measured by cost of completion
·         K dmgs are forward-looking, putting P in position as if K had been performed
·         Punitive dmgs rarely awarded in K
·         Can go halves b/w $12,000 and $60,000
Peevyhouse v. Gardland Coal
·         Ps wanted $29,000 for strip mining
·         Jury awarded $5,000 but ct reduced to $300
·         D did not perform remedial measures of filling in pits and smoothing the surface after strip mining
·         Is this case more compelling than Groves since it was a family farm?
·         Statute can be read as cost of completion as a measure
·         $5,000 is a compromised verdict b/c $29,000 too much but $300 is not enough
Acme Mills and Elevator Co.
·         K to thresh wheat and deliver at a certain price, ended up selling at higher price
·         K to sell wheat for $1.03/bushel on 4/26
·         D sold wheat for $1.16/bushel on 7/14
·         Finished threshing wheat – mkt price $0.97/bushel
·         D sold wheat at higher price than K’ed for
·         Ct: P not entitled to anything b/c mkt price of wheat at time it was to be delivered was < K price so P saved $ ·         K and mkt rule – if K price is > mkt price on date of delivery then P suffers no dmgs b/c he can buy sub goods on the mkt
o    Expectancy measure
·         Ct: this is not a good case for estoppels where one party has made a statement that another party relies on, that party cannot repudiate that statement
·         Doctrine of anticipatory breach of K – arises when Q of possible insolvency
 
1/10/08
Acme Mills and Elevator Co.
·         Breack of K b/c price of goods fell below mkt price
·         D’s profit is irrelevant b/c no dmgs suffered by buyer
·         Contract and market formula
Laurin v. DeCarolis
·         Gravel removed by D w/o P’s approval
·         P suffered no $ loss but ct awards dmgs
·         Ct measures dmgs by D’s gain but ct didn’t do that in Acme
·         Loss of possible profit for P
·         Restitution – D was unjustly enriched by removing gravel before conveyance
·         Ct troubled by willful breach/unjust enrichment
·         No effect on P’s expectancy in Acme  so no unjust enrichment
·         P not entitled to services of D mining the gravel
 
·         In ins cases, sometimes punitive dmgs awarded for breach of K, willful failure to settle ins claims
 
·         Diff to measure expectancy dmgs (value of a perfect hand – Hawkins v. McGee)
·         Some cts reluctant to award expectancy dmgs in sale of land à sometimes breach excusable when in good faith weren’t aware of gap in title history
·         But may seller should do some research so Flureau rule nowadays in disrepute
 
·         J. Posner – breach of K not immoral, sometimes economically efficient
o    Goods and services should be used at highest and most efficient level
·         Efficient breach may promote uncertainty
·         Assumes we can measure dmgs in all cases
·         Ignores transaction costs (no atty fees awarded)
 
Louise Caroline Nursing Home v. Dix Constr.
 
·         Construction K, nursing home seeks dmgs from Dix for breach of K to build a nursing home
·         Cost of completing K less than K price less what had been paid
·         Cost of completion is the way to further expectancy goal à not over or undercompensated any one party
 
Illinois Central RR v. Crail
 
·         Ct refused to award P retail mkt price of $9.70
·  

f b/w K price of $450/1000 and mkt price of similar staves
·         Ct: if P could’ve bought staves w/o much effort or risk, then award would be diff b/w K price and what he paid
 
1/16/08
 
·         Missouri Furnace – mitigate when performance is due
·         UCC – if buyer acts reas, what he chooses to do will be upheld (cover, etc)
 
Neri v. Retail Marine Corp
 
·         P K’ed to purchase boat, made deposit of $4,250, then sent letter saying it will be unable to buy the boat b/c of operation
·         Boat was already delivered to D so P sued to get deposit back and D countersued for breach of K
·         D said it could’ve sold 2 boats during this time but P said D got its $ back
·         Trial ct awarded D $500 and Ps the balance of their deposit
·         App ct awarded D lost profit and incidental damages and D has to pay P restitution of deposit
·         UCC 2-718: no windfalls against now breaching party
·         Do lost profits account for a windfall for seller since he resold boat for same price?
o    No, ct said to fulfill expectancy measure, need to compensate for lost profits b/c won’t get that $
·         This case applies when have unlimited amount of goods
·         Lost sale doctrine applies when inexhaustible supply
·         Incidental dmgs – all costs that wouldn’t have been incurred but for the breach
·         Atty fees not awarded under incidental dmgs
 
Hadley v. Baxendale
 
·         P operated mill and crank shaft broke, K’ed w/ D to ship crank to replace it but D didn’t ship it on time and P’s sued for lost profits from the delay
·         Jury returned verdict for 25 English lbs for P
·         App ct reversed – no dmgs
·         2 differing versions wrt what Ps told Ds
o    That mill was stopped or that they were to deliver a shaft of a mill that Ps were millers of the mill
·         Ct: before a party enters into K, has to have understanding of downside in case of breach of K
·         D needs to know risks and rewards so if D didn’t know that this was a critical piece of equipment then can’t be held liable
·         Have to communicate not everything to D, such as what is 1. reas f.s. (imputed knowledge), 2. special circums actually communicated to D (actual knowledge)
·         1. and 2. are P’s argsanalogy to p.c./f.s.
·         Fairer way to apportion losses if D knows downside and can adjust price accordingly
·         Pro-D rule in this case
·         UCC 2-715 – Buyer’s Incidental and Consequential Dmgs
o    In Hadley, consequential dmgs
o    2-715 (2) (a) – similar language to Hadley
o    Code reflects further limitation – have to mitigate reas
·         Hadley rule criticized as unrealistic
If clerk knew that mill had stopped, doubtful that D would’ve changed his behavior due to special