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Remedies
University of Florida School of Law
Nance, Jason P.

REMEDIES

NANCE – FALL 2016

COMPENSATORY DAMAGES

Basic Principles:

Put P in the position they would have been in but for D’s wrong (Hatahly Rule). Rightful position standard.
General Damages – those that occur initially bc of the breach.

ED’s, pain & suffering, etc.
These are speculative and suspect.
Should refer to the value of what P lost from the initial impact of D’s wrongdoing.

Value of prop destroyed/not delivered, reduction in value of prop that was damaged/defective.

Special Damages – Those that occur bc of general damages (consequential damages)

nterest, loss of profits, loss of use, lost income, med expenses, etc.
These are real, provable and reliably measurable.
Should refer to everything that happens to P as a consequence of the initial loss.

One Satisfaction Rule:

P cannot recover the same item of damage more than once.

United States v. Hatahley:

TC erred by making blanket damage determination instead of considering damages actually incurred by each P.
Each had different levels of economic damage incurred as each had differently valued animals, and each suffered at a different level.
General Damages = MV of animals & time/labor spent training them (replacement cost)
Special Damages = everything else.

Value As The Measure of The Rightful Position:

Fair Market Value:

When there is a well-functioning market, Cts usually use an objective measure of value.

Value of property taken or destroyed.
Value before damage – value after damage.
K price – market value of prop promised but not delivered.

Other ways value may be proved:

Price quotations in an active market for same/similar prop.
Estimates of experts.

FMV is measured at the time of loss.

Ex: If x bought fridge for $600 5 years ago and a comparable fridge today is $800, but when y burns down x’s house, at that time x’s fridge was only worth $100, then Ct will likely only award $100.

Cts don’t allow sentimental/subjective valuations bc of potential inflation/P’s lying.

Thus, if objective valuation undercompensates P, sue for emotional distress.

Fair Market Rental Value / Loss of Use:

Renting like property.
Loss of wages if no like prop available for rent.
Emotional distress associated w/loss
Damages are usually measured at the time of loss.
P’s can usually get this in addition to FMV or replacement cost.

Replacement Cost – Lesser of Two Rule: (In Re September 11th Litigation)

P can only recover the lesser of replacement cost or MV.
Giving P higher value may make them better off than they were before and we don’t want to overcompensate P.
In Repair Cases: Applies to choice between repair costs and the difference in value of the prop before and after the damage.

Ex: MV of car = $10k
After crash value = $500
Repair Cost = $15k
Ct would award = $9500 ($10k – $500).
This is bc if we give you $15k, you might buy a $10k car and pocket the extra $5k, thus making you better off.

Special Purpose Prop Exception:

When this applies, Lesser of Two Rule does NOT apply.
Prop designed for a particular use, especially if that use is not-for-profit use, may have little value to anyone other than the owner.
Used when there is no market value for the prop.
But, look to purchase price, if there is one. (In Re September 11th).

Trinity Church v. John Hancock Mutual Life Ins. Co.:

When diminution in value cannot be reasonably determined, reasonable costs of reconstruction or replacement may be used as the measure of damages.
% difference in damage before and after construction = amount of damage caused to D.
Since D caused 39% of the damage, they have to pay 39% of the total replacement cost + interest.

Contract Damages: Reliance & Expectancy:

A (Position after wrong) ———————— B (status quo ante) ————————- C (promised position).

K Damages = C – A (except reliance damages)
Tort Damages = B – A (restore the status quo)

Types of Remedies Available For Breach of K:

Expectancy Damages.
Reliance damages (shows up when neither side can prove ED’s).
Restitutionary (subset of reliance).

Specific Performance.

Standard For Contract Damages:

= Comparing position P would have been in but for breach and position of P after the wrong. (Expectancy).
Non-breaching parties are often given the choice between ED and reliance damages.

This is useful where ED are hard to prove and in losing k’s.

Expectancy Damages:

ED’s are only recoverable in k, NOT in tort.
:

What was promised – value of what was received.

What P’s choose 95% of the time.
Can recover incidental damages on top of EDs.
Compare promised position to position after wrong.

Promised position is NOT the k price, it’s the expected profit!! (must factor in mitigation!)
Aims to put you in same position as if the breaching party had performed.

Policy Reasons / Arguments For EDs:

If people fail to keep promises, they should be required to pay as though they did.
W/o ED people would have less reason to count on others to keep their promises.
**ED should serve as a cap on the amount of damages bc they are designed to give P exactly what was bargained for and no more or less.
K creates rights to which P becomes entitled, and this contractual entitlement is what the P loses when D breaches.

Gross Expectancy:

Covers the full payment/performance by P + a profit margin.
If P spent $30k prep to perform a k and D breaches and P can prove they would have made $10k to profit, P can recover $40k.
BUT, if D can prove P wo

onsequential damages that S had reason to know about at time of contracting AND that B could not reasonably avoid.

General Rule on Buyer’s Remedies:

Choice of 2 damage remedies when S has failed to make delivery, repudiated the k, or delivered goods that B has rightfully rejected bc they did not conform to the k.
Under either measure B is entitled to a refund of any funds paid to S in addition to further damages.

Where S Repudiates, Fails to Deliver, or B Returns Non-Conforming Goods:

§2-712 Cover:

B can cover by making a good faith purchase of substitute goods w/o unreasonable delay.
Amounts toward purchase price paid to S + (cover price – KP) + incidental and CD – expenses saved.

§2-713 Market Damages:

B can recover difference between KP and the market price.
Amounts toward purchase price paid to S + (MP at place of tender – KP) + incidental and CD – expenses saved.

Where S Delivers Non-Conforming Goods & B Accepts:

2-714 Remedy for Accepted Goods:

When B has accepted non-conforming goods and given notice of non-conformity, B can obtain damages resulting from non-conformity as determined in any manner that is reasonable.
Breach of Warranty/ Benefit of Bargain Formula: (if proved, B can get):

FMV of the goods accepted – their if they had been as warranted (at the time and place of acceptance).
May also be able to get incidental and consequential damages here.

Chatlos Systems v. National Register Corp:

S breached bc they made warranty promises about computer system which turned out to be false.
The correct measure of damages for k breach is FMV of goods accepted – Value they would have had it they had been as warranted.
Evidence of k price may be relevant to FMV (since no FMV for product bc what P wanted didn’t exist yet), but it is not controlling!
B here got ED’s. They cannot get more than they bargained for.

Specific Performance of K:

If goods are unique, ask Ct for SP. See SP section.

§2-715 Incidental Damages:

Expenses reasonably incurred in inspection, receipt, transportation, custody, and care of goods rightfully rejected, any reasonable charges in connection w/effecting cover, and any other reasonable expenses incident to the delay or breach.