Remedies –
– expectation damages
– reasonable mitigation
– policy arguments for expectation damages
Ways of increasing non-breacher’s recovery
– damages for cost of completion
– specific performance
– liquidated damages
– reliance damages
– restitution and rescission
– insecurity and anticipatory repudiation
Ways of reducing nonbreacher’s recovery
– forseeability
– policy
Determining whether a breach has occurred
– implied excuses
– implied warranties
– nondisclosure and misrepresentation
– transcription errors
– meetings of the minds
– parol evidence rule
Determining whether enforceable obligation was created
– statute of frauds
– requirement of consideration
– promissory estoppel
Items of disagreement for Contract
No contract
No breach
Remedies
REMEDIES
Expectation Principle – Grand Unified Theory of Contracts
Put the non-breacher in a position where she would have been had the contract been preformed.
Remedy = 1st Benchmark – 2nd Benchmark where
1st Benchmark = where the non-breacher would be if contract is preformed
2nd Benchmark = where the non-breacher is not that the contract is breached (assuming proper mitigation)
Mitigation principle is a qualification to the expectation principle. Use cost-benefit analysis to determine proper mitigation.
Judges err on the side of the non-breacher when determining reasonable mitigation. We do not want to encourage breaches and helps courts balance out intangibles such as litigation and distress caused by breacher.
Mitigation is based on time of breach based on the two benchmark approach.
Lost volume seller – Seller always has widgets available to sell. If buyer breaches contract, she is able to resell, seller is still injured by breach because she loses one additional sale. (see Jets Service)
Employment contracts –
Employee breaches – If employee breaches K, employer can recover extra costs of obtaining equivalent services (see Handicap Children v. Lukaszewski).
Employer breaches – Courts only insist on mitigation (finding a new job) if it is substantially similar. Non-breacher could be awarded salary (minus disutility) is no new job can be found. If new job accepted, non-breacher would be awarded old
N – Is breacher a fiduciary, insurer, or a tortfeasor?
Y – Is there causation?
N – Is it outrageous?
Y – Is there causation?
N – No damages
Is there causation?
Y – damages
N – no damages
POLICY READINGS
Atiyah –
British scholar in contract law – principle rule is “no harm, no foul”.
Instead of expectation damages, he follows, “Put the non-breacher in a position where she would have been without the breach.” (very similar to reliance level of damages).
Makes policy argument that this helps spread the wealth since poor people will generally be defendants.
