Flashcards in Page 51 Deck (19):
If expectation damages aren't reasonably certain, what happens?
You can't recover for them (because it is essentially speculation)
What are the two views about proving lost profits under expectation damages?
- traditional view: no speculation is allowed
- modern view: the only time the damages are cut off for uncertainty is if they are fairly severe
- UCC: damages are liberally administered
If there were lost profits being claimed under expectation damages for an existing business, is that speculative?
No, because future profits can be estimated from past profits
Are expectation damages from a new business considered too speculative for recovery?
In the past yes, today there is a tendency to examine each case on its merits and allow recovery of lost profits if they can be determined with reasonable certainty (like comparing to a similar business in the neighborhood)
What are consequential damages?
Damages above and beyond general damages as a result of the buyer's particular circumstances in a breach
What is an example of consequential damages?
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
It is incidental damages?
Cost of getting a substitute performance ie: extra money to get a new contractor, costs to ship the goods that were wrongfully rejected, storing goods that are waiting for resale after wrongful rejection, etc. These are usually added to expectation damages
What is a collateral source payment?
Being compensated for a breach by another party besides the breacher. Ie: insurance
What is the split on collateral source payments?
Some court say they should reduce damages, and others say the breacher is responsible for all damages so doesn't matter
What is the duty to mitigate?
Injured party can't recover damages that could've been avoided by reasonable efforts
Under the UCC, if a seller fails to deliver, the buyer has a right to do what?
Cover: by substitute goods and get damages. If he doesn't cover, he is barred from consequence of damages that could've been prevented by covering
If an employer wrongfully terminated an employee, the employee has a duty to do what?
Mitigate by looking for a comparable job
If in a construction contract the owner breaches, what is the duty of the contractor?
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.
What expenses are recoverable in an effort to mitigate?
Any expenses incurred in a reasonable effort to mitigate are recoverable as incidental damages whether they are successful or not
What are compensatory damages?
Lost value, the damages that are the natural/probable result of a breach and contemplatable when the contract was formed
What are the two approaches to general contract damages?
- common-law approach: gives the losses caused and the games prevented by the breach (can get the profit you would have made if defendant 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 approach: divides the protected interests into restitution, reliance, and essential interests
What is a reliance interest?
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
What is expectation interest?
Prospect of gain from the contract