Page 51

Question 1

If expectation damages aren’t reasonably certain, what happens?

Answer 1

You can’t recover for them (because it is essentially speculation)

Question 2

What are the two views about proving lost profits under expectation damages?

Answer 2

• traditional: no speculation allowed
• modern: the only time the damages are cut off for uncertainty is if they are fairly severe
• UCC: damages liberally administered

Question 3

If there were lost profits being claimed under expectation damages for an existing business, is that speculative?

Answer 3

No, because future profits can be estimated from past profits

Question 4

Are expectation damages from a new business considered too speculative for recovery?

Answer 4

• in the past: yes
• today: allow recovery if lost profits can be determined with reasonable certainty (like comparing to a similar business in the neighborhood)

Question 5

What are consequential damages?

Answer 5

Damages above and beyond general damages as a result of the buyer’s particular circumstances in a breach

Question 6

What is an example of consequential damages?

Answer 6

Seller breaches on the sale of a computer the buyer intends to use, so damages are the difference between the profits he actually earned after the breach, and the profits he would’ve earned if the computer had been furnished as promised

Question 7

What are incidental damages?

Answer 7

The cost of getting substitute performance. Ie: extra money to get a new contractor, costs to ship goods that were wrongfully rejected, storing goods that are waiting for resale after wrongful rejection, etc. These are usually added to expectation damages.

Question 8

What is a collateral source payment?

Answer 8

Being compensated for a breach by another party besides the breacher. Ie: insurance

Question 9

What is the split on collateral source payments?

Answer 9

• some courts: should reduce damages

- others: the breacher is responsible for all damages, so it doesn’t matter

Question 10

What is the duty to mitigate?

Answer 10

The injured party can’t recover damages that could’ve been avoided by reasonable efforts

Question 11

Under the UCC, if a seller fails to deliver, the buyer has a right to do what?

Answer 11

Cover: buy substitute goods and get damages. If he doesn’t cover, he is barred from consequential damages that could’ve been prevented by covering

Question 12

If an employer wrongfully terminated an employee, the employee has a duty to do what?

Answer 12

Mitigate by looking for a comparable job

Question 13

If in a construction contract the owner breaches, what is the duty of the contractor?

Answer 13

Not to add to the owner’s damages by continuing work, but he needn’t get an alternative job since it is likely he could’ve taken other jobs during the contract.

Question 14

What expenses are recoverable in an effort to mitigate?

Answer 14

Any expenses incurred in a reasonable effort to mitigate are recoverable as incidental damages whether they are successful or not

Question 15

What are compensatory damages?

Answer 15

Lost value, the damages that are the natural/probable result of a breach and contemplatable when the contract was formed

Question 16

What are the two approaches to general contract damages?

Answer 16

• CL: gives the losses caused or the gains prevented (get the profit you would have made if D had performed the contract, or the amount of gains prevented by the difference between cost of performance and the contract price and recovery for losses).
• Modern: divides the protected interests into restitution, reliance, and essential interests

Question 17

What is a reliance interest?

Answer 17

Detriment incurred by changing position. Includes:

• essential reliance/performing costs: expenses toward performing the contract
• incidental reliance/surplus costs: expenses not required by contract but in furtherance of it

Question 18

What is expectation interest?

Answer 18

Prospect of gain from the contract

Question 19

What are the damages for the sale of real property?

Answer 19

• to buyer: contract price minus market price (minority: recovery limited to reliance damages: actual amount expended, and standard measure of damages only available if seller breaches in bad faith)
• to seller: market price minus contract price