Contract Expectation Damages

Front 1

Claim for damages of total breach has ____ elements

Back 1

4

Front 2

The elements of a claim for damages for total breach are:

Back 2

1. Loss in value
2. Other loss
3. Cost avoided
4. Loss avoided

Front 3

Loss of value

Back 3

the caused the injured party a loss by depriving the party, at least to some extent, of the value to the injured party of the performance that should have been recieved and the value to that party of what, if anything, actualy was received

Front 4

Other Loss

Back 4

the breach may cause the injured party loss other than loss in value, and the party is also entitled to recovery for this,

Front 5

What limitations is "other loss" subject to?

Back 5

unforeseeability

Front 6

What type of damages does "other loss" give rise to?

Back 6

incidental and consequential

Front 7

Incidental damages

Back 7

additional costs incurred after the breach in a reasonable attempt to avoid loss

Front 8

Does the attempt to avoid loss have to be successful?

Back 8

NO

Front 9

Conseqential damages

Back 9

injury to person or property caused by the breach

Front 10

What is the general principle for loss recovery?

Back 10

That ALL loss, however characterized, is recoverable.

Front 11

Does the breach have to be "total" to claim incidental and consequential damages?

Back 11

No, "other loss" applies regardless of whether or not the injured party chooses to treat the breach as total. It applies for both total and partial breaches.

Front 12

Cost Avoided

Back 12

the injured party terminates and claims damages for total breach, the breach has a beneficial effect on that party saving it the further expenditure that would otherwise have been incurred.

Front 13

Can "cost avoided" be claimed for a partial breach?

Back 13

No, only useful for TOTAL breach.

Front 14

Loss Avoided

Back 14

the injured party claims damages for total breach, and the breach has a further beneficial effect on that party by allowing it to avoid some loss by salvaging and reallocating some or all of the resources that otherwise it would have had to devote to performance of the K.

Front 15

Example of loss avoided

Back 15

the injured party is a builder that, after stopping work after terminating a construction K, uses some of the leftover material to on another K.

If an injured party is an employee who, after being wrongfully discharged by an employer, takes other employment, the "loss avoided" is the net amt that has been earned or will be earned for that employment

Front 16

What is an example of where "loss avoided" will be based on the actual favorable arguments?

Back 16

if the injured party happens to make especially favorable arrangements to dispose of leftover materials, and thereby avoids more loss that another person might have succeeded in doing.

Front 17

Which 2 of the 4 elements for a claim of damages for breach are ADVERSE to the INJURED party and therefore INCREASE damages?

Back 17

loss in value and other loss

Front 18

Which 2 of the 4 elemets for a claim of damages for breach are BENEFICIAL to the INJURED party and therefore DECREASE the party's damages?

Back 18

cost avoided and loss avoided

Front 19

What is formula Farnsworth's formula for a TOTAL breach?

Back 19

general measure = loss in value + other loss - cost avoided - loss avoided

Front 20

What is Farnsworth's formula for a PARTIAL brach?

Back 20

general measure = loss in value + other loss

Front 21

Rest 2d sec. 346(a) does NOT MEAN that beacause of an assumption of breach.....

Back 21

that the court necessarily will or should be indifferent to the cause of the nonperformance

Front 22

Rest 2d sec. 346(a) DOES MEAN that because of an assumption of breach....

Back 22

that the party agrieved by that non-performance will ordinary be entitled to some remedey, EVEN if only "NOMINAL DAMAGES"

Front 23

What is the important question in the majority of cases arising out of breach of K?

Back 23

the WAY in which damages are to be COMPUTED

Front 24

The 3 principal purposes which may be pursued in awarding K damages are:

Back 24

1. Restituion Interest
2. Reliance Interest
3. Expectaion Interest

Front 25

Restitution Interest

Back 25

The interest protected when P has in reliance on the promise of D conferred some value on D. D fails to perform his promise. The court forces the D to disgorge the value he received from P.

Front 26

What is the object of Restitution Interest?

Back 26

The prevention of gain by the defaulting promisor at the expense of the promisee....the prevention of unjust enrichment.

Front 27

Is it important to note how a suit is calssified, i.e. as contractual v. quasi- contractual, or suit to enforce K v. suit based on rescision of K?

Back 27

NO, this is IMMATERIAL, these questions relate to the superstrx of the law, not to the basic policies with which we are concerned.

Front 28

Reliance Interest

Back 28

The interest protected when P has in reliance on teh promise of D changed his position.

Front 29

What is the object of Reliance Interest?

Back 29

To put the P in as good a position as he was in before the promise was made.

Front 30

Expectation Interest

Back 30

The interest protected when without insisting on reliance by the promisor, may seek to give the promisee the value of the expectancy which the promise created.

Front 31

What is the object of Expectation Interest?

Back 31

To put the P in as good a position as he would have been had D performed his promise.

Front 32

Which of the 3 interests presents the strongest case for relief? Why?

Back 32

Restitution Interest b/c it involves a combo of unjust impoverishment w/unjust gain

If, like Aristotle, we regard the purpose of justice as the maintenance of and equilibrium of goods among members of society, the restitution interest presents 2x as strong a claim to judicial intervention as the reliance interest, since if A not only causes B to lose one unit but appropriates that unit to himself, the resulting discrepancy between A and B is not 1 unit but 2.

Front 33

Who developed the 3 interests that are considered the "modern" approach to K remedies?

Back 33

Lon Fuller and William Purdue

Front 34

What is the expectation that the court seeks to protect in its award of K damages?

Back 34

It has long been the policy for the court to attempt to compute and award damages so as to give the P his expectation he would have realized if K btwn P and D had been fully performed - the "BENEFIT OF THE BARGAIN"

Front 35

What rule serves as the stated norm in K damages?

Back 35

Expectation Damages

Front 36

In which Restatement is the Farnsworth formula incorporated? What is the formula used for?

Back 36

Rest 2d sec. 347

To calculate damages based on the injury to P's expectation interest.

Front 37

What questions are asked in attempting to determine a general measure of damages?

Back 37

1) How are the injured party's expectations to be measured in terms of $?

2) What sum will put the injured party in as good a position as if the K had been performed?

Front 38

What do "answers to expectation measured in $" and "P's position as if the K had been performed" in order to calculate damages depend on?

Back 38

Whether the injured party has terminated the K, refused to render any further performance, and is claiming damages for total breach

OR

Has not terminated, stands ready to perform to render any remaining return performance, and is claiming damages for partial breach.