Midterm v2 - Expectation Damages

Question 1

What is the purpose of expectation damages? What do you get?

Answer 1

Put P in same position as if K had been performed (expectation value)
Can get: 1) Pecuniary and non-pecuniary damages, 2) Wasted expenses, 3) Lost Profits (Net), 4) Consequential losses

Question 2

How are Expectation damages assessed?

Answer 2

Quantum is difference between P’s expected financial position absent breach and actual position due to breach

Will consider: 1) P’s past sales, 2) reasonable and fair expectation in the circumstances

Question 3

What do lost profits include?

Answer 3

Canlin/Magnussen - Past and FUTURE losses directly resulting from the breach, including LOST OPPORTUNITY to earn profit

Question 4

What is the Test for Lost Profits?

Answer 4

Canlin

1. Establish causation (lost profits must be DIRECT CONSEQUENCE of breach)
2. Losses must be reasonably foreseeable AT THE TIME K WAS MADE (ie in reasonable contemplation of parties)

Question 5

What limitations are there on Lost Profits?

Answer 5

1. Remoteness – damages/costs must be a natural result of the breach
2. Contingencies that could have affected profits will be accounted for (Magnussen)
3. Expenses saved as result of breach will be deducted, to avoid double recovery

Question 6

True or false: lost profits are presumed foreseeable in most contracts.

Answer 6

False. Lost profits are generally foreseeable in commercial transactions because profit is the ESSENCE of most commercial Ks (Canlin)

Question 7

True or false: P can claim BOTH gross profits and wasted expenses (expectation and reliance). Explain

Answer 7

False. P can claim both NET profits and wasted expenses (expectation and reliance). (Ticketnet)

Cannot claim gross profits + expenses b/c would result in DOUBLE COMPENSATION

Question 8

What is P entitled to re expectation damages for a K where D has discretion in performance and a minimum level of performance is specified in the K?

Answer 8

Damages assessed based on MINIMUM level of performance b/c P accepted this as possibility absent breach (Hamilton)

No need for factual inquiry; unaffected by bad faith (Agribrand)

Question 9

What is P entitled to re expectation damages for a K where D has discretion in performance and no minimum level

Answer 9

Where there is no minimum level of performance specified, damages will be assessed in manner most favorable to D (Paula Lee).

This is a factual analysis (Durham Trees) where factors considered include 1) past performance, 2) commercial reasonableness

Question 10

Does a duty of good faith/honest performance of contractual performance exist? If so, is it independently actionable?

Answer 10

Breach of duty of good faith/honest performance of contractual obligation independently actionable (Bhasin)

Damages assessed based on expectation

Question 11

Are discretionary benefits normally compensable?

Answer 11

No. Benefits paid voluntarily by the employer carry no legal entitlement contemplated at time fo the K and therefore aren’t recoverable (Bardal)

However, intention/contemplation of the parties is key (Globe and Mail)

Question 12

When the discretionary benefits are part of the normal relationship between the parties, are they compensable?

Answer 12

They can be, if there is a reasonable expectation of the benefit in the future (Ditmars)

This depends on the actual practice involved (Zeidel)

Zeidel Factors include 1) Necessity, 2) Regularity, 3) Past exercise of discretion, 4) Proportion of benefit to overall salary