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					REMEDIES FOR BREACH OF CONTRACT
Restitution Party recovering values conferred upon another Party through efforts to
            perform a Contract
            (Most worthy of a win, because Party has tangible losses)
            Unjust enrichment

Reliance     Party recovering losses suffered by virtue of reliance on Contract
             (innocent Party sustained a loss)
             “In as good a position as before”

Expectancy Party realizing the value of expectancy created by a promise
           (Lost something party never had anyway)
           In as good a position as if Contract was completed.


Substitution Relief – When K is breached, any remedy is only a substitute. Money is as
              close as the law can come


REMEDIES AVAILABLE: P MUST CHOOSE ONE!
          Damages
          Specific Performance
          Rescission
          Restitution
          Quasi-Contract
          Tort Action


COMPENSATORY DAMAGES – Direct Loss and Foreseeable (consequential) losses
PUNITIVE DAMAGES – Not Recoverable
NOMINAL DAMAGES – No real fiscal value, $1.


MEDICAL CONTRACTS
HAWKINS v MCGEE (p4)
    What was the promise? 100% perfect hand
    What was delivered? 40% hand
    What is P entitled to? The difference – 60% of K price!
                 Any other losses are not part of the Contract
    “When a contract is breached, law protects by giving plaintiff his expectation
                 interest. Reliance and Restitution are irrelevant!” p.5
    Judge instructions for pain and suffering were in ERROR!
                 They were price P wiling to pay for 100% perfect hand.

CONTRACTS OUTLINE                                                     Page 1 of 7
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Walter M. Spader, Jr.
SULLIVAN V. O’CONNOR (P7)
     P had 2 plastic surgeons
     Able to recover by Reliance theory:
            1) Fee to the Defendant
            2) Hospital Fee
            3) Worsening of Condition
            4) Pain and Suffering of 3rd Operation
     Pain and Suffering of first two surgeries waived (Expectancy Theory)

CONSTRUCTION CONTRACTS:
      If Owner Breaches: Builder gets at least profits he would have made
                            Or, expenses if he already incurred them
      If Builder Breaches: Owner gets Cost of Completion PLUS Reasonable
                            Compensation for delays
              If only breach is late performance: only damages is loss of property use

GROVES V. WUNDER (p11)
    D promised to leave land in a uniform grade but breached.
    Land would be worth $12k+ in promised position,
           but will cost $60k to get it to that grade
    Ct held D owed P $60k, D’s breach was willful and must deliver what P was
    promised.
    The time used to measure value is important!
    Difference in Value Rule:
           TC held that P is entitled to difference in value
           App court held damages as “cost of completion”

ELLIOT V. CALDWELL (p12) [in Groves]
     Willful breach
     Must deter future contractors from breeching contracts!
     Ct expresses punishment concept…when you are bad you should not have
     benefit of the court treating you as if you didn’t!

JACOB & YOUNG, INC. V. KENT (P12) [also in Groves]
    P entitled to full payment less diff between the value of the
            house with the pipes as to a house without the pipes.

EQUITABLE DOCTRINE OF SUBSTANTIAL PERFORMANCE:
     If D’s breach was willful and finished project was substantially performed,
             D is entitled to full payment less P’s damages.




CONTRACTS OUTLINE                                                     Page 2 of 7
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Walter M. Spader, Jr.
PEEVYHOUSE (p19)
“law is not absolute, for every dispute there is only one solution.” – Chen
Same situation as Groves, but court only give $500 value of the land
Purpose of remedies is to compensate the non-breaching party.
“a breach is a breach, innocent or not, someone suffers.”

SALES CONTRACTS:
       Standard: Damages is difference between Kprice and Market Price at time of
             delivery. Non-breaching party should be compensated.

ACME MILLS v. JOHNSON
Conversion – Seller converted buyer’s property without permission
              Buyer is entitled to sacks or value of the sacks ($80)
              ACME had no damages, even though he didn’t get his wheat
                     B/c market price was lower on day of delivery
                             He actually could have saved money by covering!
Contract Market Rule by UCC:
      Time and place of delivery is relevant
      Must compensate aggrieved party for costs.
      Ie. K to sell book for $50 was breached
              P buys book for $60
              P is entitled to $10 from D
      K price when buyer learned of breach, b/c he could then cover.

Cover: Going to market for a substitute purchase

Illinois Central RR. Chen: “I’m not sure SC appreciated facts well enough”

CAROLINE NURSING HOME v DIX
          PO suing D for abandoning construction project.
          Ct says P can’t recover remainder of price to construct b/c no damages
                Construction can still be completed within Kprice!

LUTEN BRIDGE DAMAGES FORMULA:
Labor & Materials Expended + Expense Incurred on Past Performance + Profit Realized
             if Completed
After you know there will be a breach, you cannot continue to perform the K and base
             damages on full performance! You have a duty to mitigate damages

Parol Evidence Rule: In a written contract, things that are outside the K are not allowed.
             Parol basically is the preference for things to be in writing




CONTRACTS OUTLINE                                                       Page 3 of 7
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Walter M. Spader, Jr.
WRONGFULLY DISCHARGED EMPLOYEES:
      Are allowed to get full contract price less what they could reasonably still
      earn…ee has a duty to mitigate damages, as well! But no duty to accept inferior
      employment – see Parker

PARKER v 20TH CENTURY FOX
Damages= Kprice minus what she earned by her own efforts
          SMcL must use “reasonable effort” to find substantially similar
          employment but not inferior employment.

COVER:
    Buyer must cover on the date of K completion
           – any earlier or later the risk is on the buyer
          even on K with multiple dates of delivery
    UCC §2-712 -- buyer is entitled to reasonable “cover costs”

MISS FURNACE
     Cover at your own risk – Damages, is Mkt Price at time of each delivery
     You must cover in good faith

KERSAGE COMPUTER
    D cut K ½ way through
    Ct says you can’t mitigate K P picked up, some business are “expandable”

RELIANCE COOPERAGE
     Must resist efforts to have anticipatory breach remedies aid breacher

ANTICIPATORY BREACH
     No requirement to bring suit immediately
     You don’t even need to stop what you are doing, if that may cause you greater
     losses
     UCC §2-610 – Must only wait a commercially reasonable time before seeking
     alternate sources of supply

OLOFFSON v COOMER
    P K’ed with D for corn. D told P it was a bad season and he wouldn’t be able to
    grow the corn. P waited until the end of season and bought corn at highest price
    and then sought cover costs.
    Ct said P didn’t act commercially reasonable, as UCC requires. Corn was easily
    attainable at time of D notice of repudiation.

UCC §2-706 through §2-709




CONTRACTS OUTLINE                                                   Page 4 of 7
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Walter M. Spader, Jr.
SALES CONTRACTS
NERI v. RETAIL MARINE
       P k’s to buy a boat and breached
       D sues for lost profit
       Ct damages = down-payment minus profit (UCC §2-821)
Seller must be in as good a position as if contract had been completed.

             Davis Case – Must show that additional sales wouldn’t hurt profits

HADLEY v BAXENDALE
    D responsible for reasonably foreseeable damages
           Damages that arise “naturally or reasonable contemplated by both
    Only responsible for special circumstances if they were communicated

Chen: “Whenever a convention rule applies, Hadley does not”

GLOBE REFINING
          D must consent to special damages

VICTORIA LAUNDRY
           Reasonable to assume lost profits, D knew water heater was going to
           immediate use.

VALENTINE V. GEN. AMERICAN CREDIT
IN EMPLOYMENT CONTRACTS…the contract is economic so Mental Stress due to
          breach not recoverable b/c of employment at will
          Mental stress would be recoverable in caesarian contract or marriage K

HERON II
    Damages in breach cannot put P “in a better position”




RELIANCE DAMAGES
CONTRACTS OUTLINE                                                    Page 5 of 7
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Walter M. Spader, Jr.
CHICAGO COLISEUM v. DEMPSEY CASE
     Actual Damages – money already spent AFTER signing of the K is allowed
     Speculative Damages (gains prevented) are too uncertain for recovery
     Expenses Incurred in Restraining Attempt were at Ps own risk
     Expenses Pre-Contract are not recoverable as not foreseeable by D.

BOONE V COE
    reliance case, if nothing is in writing – Statute of Frauds.
    Chen: “units of bad” – 2 in this case – very bad
    Exception to Statute would be if D received a benefit – here they did not

RESTITUTION DAMAGES
ANGLIA TV V. REED
           D has certain knowledge of pre-K expenses, being in the business
           Is liable for breaching contract for those expenses

US V ALGERNON BLAIR
Must pay restitution if you had benefit of P’s work!
You can recover reasonable value of work!
      K is “thrown out” but is evidence of the value
      Algernon would have lost money if they completed the K, but that is irrelevant
      Suing for restitution or QM is not suing on the K.
      D was able to use what P did, and was the breacher – they pay!

Same in Zara – if you base your claims on the K, you are affirming the K

QM = Quantum Meruit – Work/Labor Done

US v ZARA CONTRACTING
              1) Extra Work separately compensable
              2) Subcontract received on the K – should apply to subcontractor
              3) Quantum Meruit – reasonable value.
Incidental Reliance Losses – Specific to the nature of the Contract
Essential – Reliance of preparation for performance or performance of K
Incidental – Preparation for collateral transaction that P plans to do

OLIVER v CAMPBELL (105)
     Lawyer sues Client who discharged him directly before verdict in QM
     QM was higher than Kprice…but since contract was substantially done
           Damages on Kprice

      If K has been performed, there is no restitution, only Kprice damages!



CONTRACTS OUTLINE                                                    Page 6 of 7
Printed at 1:08 A8/P8 on 8/15/08
Walter M. Spader, Jr.
Slades’s Case – major turning point in law – you can allege a second promise to pay,
      simply by having someone indebitatus. Non-transversable without a need to
      prove it!
1609 – Six Carpenters Case
      Traveler handed horse to attendant without a discussion of pay
      Traveler never promised, ie. Didn’t have to – pay!

Employee who breaches contract:
     Unintentional – should recover QM
     Intentional – old view = nothing
                   Modern view = Britton

BRITTON v TURNER
     Quasi-Contract
     P only worked for 9.5 months of one-year contract
     Can recover for value of work done minus damages to D

THACH v DURHAM
    Seller does not need to prove he is owed more than solely damages
    Burden is on defaulting buyer in seeking refund
    Down payments are for protection

PINCHES
     P suing for building of church on Quantum Meruit restitution damages
     The church is useable, breach wasn’t willful.
     P is allowed K minus costs to fix errors

KELLEY
     Use Pinches saying it is a substantial performance case!
     No! It is a restitution case!

Restitution in Algernon:
       Reasonable Value of Service is Damages when D is in breach
Restitution in Pinches
       Value of benefit received by D when P is in breach, unwillfully
If promisor hasn’t completed b/c promisor breached, he can recover mkt value or work
       done




CONTRACTS OUTLINE                                                   Page 7 of 7
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Walter M. Spader, Jr.

				
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Description: When a contract has been breached one has to decide what type of justice will remedy the breach. There are different types of remedies and the one which will be applied depends on the circumstances and the type of breach. Restitution happens when there have been tangible losses and the wronged party wants those back. Reliance is when a person has suffered losses due to the contract being breached and wants to be paid back what was lost. Expectancy is when the contract isn't followed out and the wronged party wants to be paid out as if it was. Substitution relief is when there is no real way to make good on what happened so money is the best there is. Compensatory damages are those for a direct and foreseeable loss while punitive damages are for those which are not recoverable such as murder, libel or defamation. Nominal damages are a token amount. So according to the situation one has to decide which damages are most appropriate and how much. A medical case when a person suffers pain and injury will be different from a business case when a deal hasn't been followed through on. A person fired with undue cause will be different from someone who is caught stealing.