Expectancy Damages

Put the injured party in as good a position as s/he expected to be in upon completion.
Cover will include all partial performance by its nature, and is not an issue, except in PE or UE claims. If Cover is not obtained, there may be a foolish monument issue. Look to: 1. Who wanted the term, was it a form K? 2. Was the price discounted? 3. Why did they want it? 4. Did the jury determine a compromise? 5. Is there statutory law/policy? (New Business Rule) Proof of Loss: 1. A Reasonable Certainty, or 2. From a Reasonable Basis for Calculation, or 3. The Evidentiary Standard Lost good will requires a reasonable basis for calculating the actual loss. Reasonable Substitute Employment: 1. Field? 2. Rights? 3. Duties and Responsibilities? May get consequential damages for concrete inconveniences incurred for substitute employment.

Construction

Injured Builder KP Cost of Completion -ORLost Profit + Expenses Amt. Paid Breaching Builders Partial Performance KP CP Amt. Paid

Injured Owner Reasonable Cover KP -ORLost Value

Injured Business Owner Reasonable Cover + Lost Profits KP -ORLost Rental Value

Employment

Injured Employee KP Amt. Paid Reasonable Substitute

Injured Employer Reasonable Replacement KP

Service Volume Sellers

Hadley Rule: foreseeable consequential damages. Lost Profit, UNLESS There is a second contract made possible only by buyers breach.

Sale of Goods
Injured Seller
No Mitigation UCC 2-708(1) KP MP @Time & Place for tender UCC 2-706 KP Resale Price

Injured Buyer
UCC 2-713 KP MP @Time buyer learns of breach UCC 2-712 KP - Cover Accepted Defective Goods UCC 2-1714 MVExpected MVRecieved @Time of Acceptance Injured Buyer MV KP -ORAmount already paid, UNLESS Willful or bad faith breach. Injured party may choose the higher value. Buyer: Reasonable cover Seller: May select the higher value even if this results in better than expected position. Contradicts UCC 1-106(1): expectancy for all damages.

Cover/Resale

Volume Seller UCC 2-708(2) Lost Profit Junk Value of Unsellable Goods

Real Property

Injured Seller KP MV

The theory is that sellers often run into unforeseen problems, e.g. with the title, and they shouldnt be punished for such.

Reliance Damages
Put the injured party in as good a position as s/he was before relying on the contract. Where lost expectancy is incalculable -AND/OR- Where there is a large discrepancy between KP and potential expectancy
Losing Contract Expenses Proven Loss Variation 1 Expenses after agreement only. Losses must meet the same evidentiary standard, and breaching part bears the burden of proof.

Timing Fixed Overhead Limitations

Variation 2 Custom may play a role. All expenses the breaching party should E.g. Aretha Franklin have understood the loss potential. Overhead that could have been reallocated to other projects. Still must meet standard of proof. All the limitations for Expectancy also apply: Mitigation, Hadley, evidentiary. Also: reliance must be reasonable.

Promissory Estoppel Justified Reliance

Restatement 90(1) (1) A promise which the promisor should reasonably expect to induce action or forbearance (2) And which does induce such action or forbearance (3) Is binding if justice can be avoided only by enforcement of the promise The remedy may be limited as justice requires
PE == Contract All the normal contract remedies Limited to Reliance Pretty well agreed for use in Employment contracts

Restitution Damages Unjust Enrichment

Restatement 371 (a) The reasonable value in terms of what it would have cost to obtain it from a person in the [plaintiffs] position (b) The extent to which the other partys property has been increased in value or his other interests advanced Courts use the measure most appropriate to the conduct of the breaching party, i.e. more money for worse behavior. Split on Ceiling for Recovery
KP as Ceiling No Ceiling Some courts dont like to ignore what the parties agreed to. Restatement 373 cmt. d If work is completed Plaintiff will be limited to the KP; the difference is illogical. This is somewhat punitive, but courts say the breaching party should not be able to use the contract as a shield for liability. Bausch & Lomb v. Bressler Removes power of Plaintiffs Choice for recovery. Johson v. Bovee (If he didnt want to pay, he shouldnt have breached) PLAINTIFF CHOSES BETWEEN EXPECTANCY/RELIANCE and UNJUST ENRICHMENT Restatement 374 cmt. b The party seeking restitution is responsible doubts will be resolved against him, and his recovery will not exceed the less generous of the two measures in [371], that of the other partys increase in wealth. Measure Source Notes/Incomplete Contracts 1 Fair Market Value of The Work (a) KP Cover Amt. Paid 2 Increase in Market Value of Defendants property (b) City of Philadelphia v. Tripple 3 Plaintiffs Cost of Performance Full compensation, even if more than KP United States v. Zara Contracting 4 KP Best evidence of value IF ALL THATS LEFT ON THE CONTRACT IS PAYMENT OF MONEY, UNJUST ENRICHMENT IS NOT AVAILABLE.

Liquidated Damages Provisions

The court will not enforce a penalty provision.
Prong 1 Prong 2 Two prongs. Restatement 339 Restatement 339 Both Must be met. Reasonable forecast of just compensation Harm is incapable or very difficult to accurately estimate. Penalty provision is one that is intended to secure Courts often look at the situation at the time of the breakdown, although Notes performance. Liquidated damages are supposed to they are supposed to consider the parties positions at the time of compensate in the event of non-performance. contracting. Penalty provisions discourage contracting Policy Courts are suspicious of parties ability to negotiate damages provisions. Discourage Efficient Breach. Keep amounts reasonable. AND Use a context specific sliding scale. How To Do it Right UCC 2-718(1) (1) Reasonable in light of the anticipated or actual harm A term fixing unreasonably large liquidated damages is void as a (2) Difficulties of proof of loss penalty (3) inconvenience of nonfeasablity of otherwise obtaining an adequate remedy The revision permits (3) only in consumer contracts.

Specific Performance
Where money damages are inadequate
Real Property Breaching Sellers Conveyance of Title UNLESS Bone Fide Purchaser Breaching Employer Rarely, unless employees rights are based on a statute Goods are unique or other proper circumstances Breaching Buyer -SPLIT1. Not Permitted 2. Conditional on tender of title. Breaching Employee Can bar employee from working for anyone else. Contract law presumes that land is unique. Some permit buyers to create symmetry. Thirteenth amendment prohibits involuntary servitude.

Employment UCC 2-716

1. Breach has made buyers situation such that cover cannot be obtained. Stephans Mach. & Tool 2. Long-term contract, and buyer cannot get a similar contract. Laclede Gas v. Amoco Oil

Arising from Tort AND Tortish Damages Emotional Distress Damages

Restatement 353 Personal as opposed to commercial agreement. OR for the independent tort that == breach.
Involving deep, personal human relations OR personal rights of dignity

Punitive Damages

Restatement 355 Breach == Independent Tort Some commentary that this is being expanded

EXCEPTION: Bad Faith Insurance Breach; Refusal to Settle Promissory Fraud Professional Misfeasance EXAMPLES Termination of Special Relationship of Employment Stewart v. Rudner (failure to use cesarean section resulted in stillbirth) Long term employment relationship and discharge calculated to avoid Sullivan v. OConnor (nose surgery, condition much worse after multiple ops.) employer responsibilities to the employee Avery v. Arnold Home (Nursing home failed to notify PL of mothers worsening) Contract to Marry CONTRA Fiduciary Duty Jankowski v. Mazzotta (faulty home construction, distress denied) Breach + Fraudulent Conduct S&W pp. 273278 Chrum v. Charles Heating and Cooling (Distress damages not awarded for breach,)

Efficient Breach
Pro Enables best utilization More value to society (willing to pay more == more valuable) Gets resources to those best able to use them Explains why punitive damages are not awarded in contracts. Con Injured parties are not really made whole by expectancy damages Can rarely know full liability for breach Harms breaching partys reputation Significant unrecoverable negotiation and/or litigation costs May discourage use of contracts (what use are they?) Actually encourages arguably immoral behavior

Warranties
If the seller knew, or had reason to know, that the buyer reasonably had certain expectations, The seller warrants that the goods will conform to those expectations.
Express UCC 2-313 (1) Created by: (a) Fact or promise which becomes part of the basis of the bargain (1) Implied UCC 2-314 Warranty of Merchantability Merchant who deals in goods of that kind creates an implied warranty that the goods will be merchantable Must be goods at least such as: (c) Are fit for the ordinary purposes for which such goods are used. (d) Within the normal variations for such goods. (e/f) are labeled accordingly, as the agreement requires. UCC 2-315 Warranty of Fitness for a Particular Purpose

(b) Description of the goods which is made part of the basis of the bargain

(2)

(c) Sample or model which is part of the basis of the bargain creates an express warranty that the whole of the goods will conform to the sample or model. Where the seller knows, or has reason to know, that the buyer is relying Need not use formal language, or have specific intent to give a warranty. on the skill and judgment of the seller to select or furnish suitable goods. (2) Affirmation of the value, or merely the opinion of the seller or a commendation of the goods is not a warranty. Puffing Warranty EVIDENCE: (1) Specificity of Statement, (2) Definiteness of Statement, (3) Oral vs. Written CONTENT: (1) Reasonable Expectation, (2) Opportunity to Inspect VALIDITY: (1) cmt. 3 Presumption that all affirmations are part of the basis of the bargain, BUT (2) courts have applied the reasonable person test. FORMER: requirement of reliance on the affirmation in order to be a basis of the bargain. Keith v. Buchanan Comment 6: SAMPLE is drawn from the bulk of the goods, and creates a strong presumption that the goods will conform. MODEL is merely offered for inspection, and can be disclaimed as merely an illustration.

Statute of Frauds
No promise that falls within the Statute is enforceable, unless in writing and signed by the adverse party or his representative. Will not apply where all promises have been fully performed. Restatement (1) 219 Other theories of obligation may still apply.
SoF was created to reduce fraud, because at the time: England has since abolished much of the SoF over concern that parties (1) The party bringing the action could not testify or be cross-examined, hid behind the absence of a written contract. (2) There were no real rules of evidence (3) Juries were not locals who knew the parties, but were also not American judges resist applying it when they believe there is a valid oral disinterested strangers, and contract. (4) Judges had no power to overrule verdicts as against the evidence The Writing is Only EVIDENCE of a Contract Restatement (2) 131(a) the writing must reasonably identif[y] the subject matter of the contract, (b) sufficient to indicate that a contract has been made or offered by the signer to the other party, and (c) identify with reasonable certainty, the essential terms of the unperformed promises in the contract. Restatement (2) 132 can be several writings so long as the signed writings create a contractual relationship and the writings are connected by evidence. Restatement (2) 133 even a letter attempting to revoke will suffice as the singed piece if the writing is otherwise sufficient. 1 To answer for damages out of a personal representatives own estate Restatement (1) 184 Only promises to creditors that dont benefit the 2 To answer for the debt, default, or misdoings of another promisor. 3 Made in consideration of Marriage Restatement (1) 485 Excludes mutual promises to marry. Sale of land, tenements, or hereditaments, or of any interest in or 4 Includes leases. concerning them Restatement (1) 198 Not performable within a year (CANNOT be performed) May be removed if one party has fully performed within a year 5 Not to be performed within one year of the making Contracts for life more than a year Death before the end of the 366 days does not mean the contract was performed, only that the deceased is excused from performance. Restatement (2) 130 cmt. b

6 7

Authorizing or employing an agent or broker to purchase or sell real estate for compensation or commission Any agreement which by its terms is not to be performed within the lifetime of the promisor

UCC 2-201(1)
[A] contract for the sale of goods for the price of $500 or more is not enforceable unless (1) there is writing sufficient to indicate that a contract of sale has been made between the parties and (2) signed by the party against whom enforcement is brought. Amended UCC 2-201(4) removes such contracts from the one year requirement
Exceptions Part Performance Other Contracts UCC 2-201(3) (a) Specially manufactured goods not suitable for others, and the seller has Generally not sufficient for sales of land already made substantial beginnings or commitments thereto. Partial, or even full payment, generally not sufficient for specific performance (b) If the adverse party admits to a contract. But taking possession will assent and making improvements or pays a portion, (c) Goods for which payment has been paid. (e.g. 3 out of 4 pianos) that may be sufficient to get specific performance.