Contracts Outline Essay
Professor Jean Powers
Cited to Crandall & Whaley’s Contracts, 4th Edition
I) Damages (227)
A) Introduction (227)
1) General Rule – Contract damages should put the π in as good of a position as if the contract was fulfilled.
2) No action on a contract need be present for damages to be proper. An executory contract will suffice.
B) Measuring Expectation Damages (229)
1) Expectation = Expected Value + Costs – Expenses Mitigated
2) Repair Theory – Damages should put things in the state that they were specified in the contract (IE fix the land as per the contract)
(a) Argument against repair theory is that given a large quantity of money to repair land, the π will simply keep the money, ensuring a …show more content…
(b) A breaching party may be held liable for reliance damages incurred prior to formation (but in the same project) if the breach caused the loss of the entire project (or the damages were “within the contemplation of the parties when the contract was signed.”
D) Limitations of the Recovery (257)
(a) 2 Pronged test for certainty
(i) Causation – You must prove damages caused by a breach. This is an absolute bar.
(ii) Amount – You must provide at least an estimate of the damages suffered by the breach.
(b) Certainty is a problem more predominate for consequential damages.
(c) New Business Rule – Generally, a new business will have a problem proving that they were going to make money on a contract, because they have no track record.
(i) The new business rule can be overcome with empirical evidence of future profits.
(a) The Δ is only liable for damages that could be “fairly and reasonably contemplated” by both parties at formation (foreseen or foreseeable).
(b) 2 Types of foreseeable damages
(i) General damages – these are damages that arise naturally from a breach. Any reasonable person would have foreseen them.
IE the difference between the value of goods as warranted and goods as delivered.
Damages for emotional distress can be given if the distress was reasonably foreseeable due to the type of contract.