I. Chapter 1 Remedies for Breach of Contracts
II. Types of Remedies
a. Follow the Order of the remedies— Expectancy, Reliance, then Restitution—
b. These remedies you are always “RELYING” on the contract to be performed. Not a way of predicting which measure should be used. Must work through the contract (fact pattern) to find out.
i. Expectancy—Preferred American Rule (Get to the Future)
1. Court attempts to put the plaintiff in the position he would had been in had the contract been performed. (Get to the future)
2. “Benefit of the Bargain”
a. Including any profits that may have been made from the contract.
ii. Reliance- Restore
1. Put the plaintiff back in the position they were in before breach.
a. Money is paid over to a third party, not to the defendant
b. Or some type of money is paid out, either for preparation of services or contract.
2. Cannot recover any profits anticipated
3. When used: The reliance interest is used mainly: (1) when it is impossible to measure the plaintiff’s expectation interest accurately (e.g., when profits from a new business which the plaintiff would have been able to operate cannot be computed accurately); and (2) when the plaintiff recovers on a Promissory Estoppel theory
iii. Restitution- Restorative Nature
1. Way of fixing the breach
2. Something has traveled over to the defendant and nothing has traveled back over to the plaintiff.
a. “Unjust Enrichment”
i. Would be unfair for the defendant to sit the “money”
3. When used: The restitution measure is most commonly used where: (1) a non-breaching plaintiff has partly performed, and the restitution measure is greater than the contract price; and (2) a breaching plaintiff has not substantially performed, but is allowed to recover the benefit of what he has conferred on the defendant.
c. Opportunity Cost- what could have happened if the contract went forth
i. Compensation for the loss of the opportunity to gain
d. Duty to Mitigate
1. To make less severe or intense
ii. The non breaching party has a duty to mitigate damages, when possible
1. Go out and find another contract to try and limit the damages by the breaching party
III. Section 1: The Goals of Contract Damages
a. Hawkins v. McGee (Harry Hand)—Expectancy Interest
i. Promise or guarantee to fix the hand
1. Explicit promise by the doctor
b. Formula for Calculating Expectancy:
f contract (wheat case)
i. Courts used the value upon delivery if the contract had been performed
ii. Duty to mitigate
1. But in doing so, must be within reason
iii. Breaching party breached, for a “bigger better deal”
iv. Efficient breach Def.—an intentional breach and payment of damages by a party who would have a greater economic loss by performing.
v. Expectancy will not be awarded in cases where there is an efficient breach. Restitution damages may be awarded.
vi. Estoppel Def.- A bar that prevents one from asserting a claim or right that contradicts what one has said or done before or what has been legally established as true.
Introduce the Promissory Estoppel Theory: Def.- A promise made w/out consideration may be enforced to prevent injustice. If the promisor should have reasonably expected the promisee to rely on the promise, which would be to their detriment.