CASES
1. Remedies:
a) Objectives of Remedies
· Contracts for medical service—Hawkins v. McGee
o A recovery for an unsuccessful operation does not include pain and suffering.
o Damages=difference between value to P of a good hand as promised by D and value of hand in present condition
· Cost of completion for builder breach—Groves v. John Wunder
o Cost to complete is the proper measure of damages even though it exceeds the potential diminution in value of the land
o When a breach was willful/without good faith, breachor cannot sue on K or invoke the benefit of substantial performances to limit damages to dimunition of value
· Damages not allowed when K price exceeds market price on day of delivery—Acme Mills & Elevator Co. v. Johnson
o P cannot collect damages for BOC when the contract price exceeds the market price on the day of delivery
b) Limitations on Expectation Damages
· Damages not allowed when no Actual Loss—Louise Caroline Nursing Home, Inc. v. Dix Construction Co.
· Builder’s duty to mitigate—Rockingham County v. Luten Bridge Co.
· Not duty to accept inferior employment—Parker v. Twentieth Century-Fox Film Corp.
o A wrongfully discharged employee does not have a duty to accept available inferior employment (of a different kind) simply to mitigate damages
· Lost profits and incidental damages recoverable despite subsequent sale—Neri v. Retail Marine Corp.
· Damages arising from special circumstances—Hadley v. Baxendale
o Damages are those that arise naturally from a breach of the K or if special circumstances were made known
· Mental distress due to breach not recoverable—Valentine v. General American Credit
o Recovery for mental distress limited to Ks that have elements of personality
· Damages not measured in costs saved to defaulting party—Freund v. Washington Square Press
c) Reliance and Restitution
· Consequential Damages arising from Breach of performance K—Chicago Coliseum Club v. Dempsey
o Damages for lost profits are not awarded if speculative
o Obligations assumed prior to K are speculative risks not to be assumed by D
o Items of necessary expense in furtherance of performance are recoverable
· Reliance on a void parol agreement where D is not benefit—Boone v. Coe
o Recover for expenses incurred and time lost in reliance on a k that was unenforceable under the SOF cannot will not granted.
· Recovery in restitution despite actual loss if K had been performed—United States v. Algernon Blair, Inc.
o A party may recover in restitution even if it would have recovered nothing in a suit on the K
· An employee who voluntarily quits before the termination of an employment K can recover the value of his services up to the K amount—Britton v. Turner
· Limitation of liability when builder substantially performs in good faith—Pinches v. Swedish Evangelical Lutheran church
o A builder who acts in good faith, but varies from K specifications, is not liable for the amount necessary to reconstruct the building to specifications if the building is reasonably adaptable to the intended use and such reconstruction would work unreasonable hardship on the builder.
· A purchaser who breaches a K can recover money paid that unjustly enriched the seller—Vines v. Orchard Hills
d) Enforceability of Contractual Damages Provisions
· Liquidated damages clause must relate to actual damages—city of Rye v. Public Service Mutual Insurance Co.
o A party cannot recover contractual damages when the amount specified in the K does not bear any reasonable relationship to the pecuniary harm suffered from the breach.
· Limitation of Liability to token amount—Fretwell v. Protection alarm
o A company may limit its liability for BOC to a token dollar amount.
o A “liquidated damages” provisions may really be an indemnity clause—and not a penalty
e) Enforcement in Equity
· Specific performance of lease—Van Wagner Advertising Corp v. S&M Enterprises
o A party may not obtain specific performance of a lease covering “unique” billboard space
o Specific performance is not based on uniqueness; instead, it is based on the uncertainty of valuing property.
· Lack of mutuality not fatal—Laclede Gas Co. v. Amoco Oil Co.
o P’s right to arbitrarily cancel the agreement without D having a similar right does not render the K void for lack of mutuality (if P is the one trying to cancel the K)
o Supply Ks
v. Swain-Roach Lumber Co.
o The fact that a promise is conditional upon a future even does not invalidate the agreement for lack of mutuality
o A contingent K is not enforceable by either party prior to the occurrence of the contingency.
· Exclusive K; reasonable efforts implied—Wood v. lucy, Lady Duff-Gofdon
o Even though P did not specifically promise to use reasonable efforts to promote D’s goods, and all compensation to D under the K is to come from such efforts, there is a valid promise by P.
· Output Ks—Feld v. Henry S. Levy & Sons, Inc. (Bread crumbs)
o The seller under an “output” K has a good faith duty to continue production for the full K term even if the K does not specify any level of production.
o Good faith cessation of production terminates further obligations (but losses from continuance must be more than trivial)
· Retaliatory discharge—Sheets v. Teddy’s Frosted Foods, Inc.
o An employee cannot be discharged for calling the employer’s attention to possible criminal violations by the employer
3. The Consensual Basis of Contract
a) Mutual Assent
· Subjective intent irrelevant—Embry v. Hargadine-McKittrick Dry Goods (“Go ahead, you’re alright”)
o A person’s subjective intent is irrelevant. The test is what a reasonable person would believe the promisor’s conduct and/or words to mean
· Testimony of belief permitted to determine subjective intent—Kabil Developments Corp. v. Mignot
o A party to an alleged oral K can testify as to whether he felt obligated to the other party
o The objective theory does not necessarily prevent a party from testifying that he acted in the belief that he was making a K.
· Objective theory and employee handbooks—McDonald v. Mobil coal Producing, Inc. (sexual harassment)
