Remedies – Money Damages Flashcards
The goal of expectation damages is to
put the non-breaching party in the same economic position that it would be in if the contract had been performed as promised.
Expectation damages are measured by comparing the value of the performance without the breach to the value of the performance with the breach.
Expectation damages MUST be proven with
reasonable certainty.
Common fact patterns include new or unproven business ventures that have trouble proving lost profits from a consistent sales record.
Unforeseeable consequential damages are
NOT recoverable UNLESS the breaching party had some reason to know about the possibility of these unforeseeable damages.
General Damages.
The type of losses that almost anyone would suffer from a breach (e.g., cost of storing rejected goods, finding a new buyer, finding a replacement vendor, etc.).
Consequential Damages.
The type of losses that are unique or special to this plaintiff (i.e., losses that arise indirectly from the breach due to the plaintiff’s special circumstances).
The goal of reliance damages is
to put the non-breaching party in the same economic position that it would be in if the contract had never been created.
Reliance damages restore the losses that the plaintiff incurred that would have never taken place but for the breached contract.
Example of Reliance Damages
E.g., Tom decides to sell his truck and agrees to pay a local television network $500 for one 30-second advertising slot. Unfortunately for Tom, the network forgets to run the ad and Tom fails to sell his truck. Tom likely cannot recover the potential sale price of his truck, but he can get reliance damages for the costs he incurred to make the ad.
A party cannot recover both
expectation and reliance damages; typically, the plaintiff must elect one or the other.
The goal of restitution is
to prevent unjust enrichment. Restitution gives the plaintiff an amount equal to the economic benefit that the plaintiff has conferred on the defendant.
EG of restitution
E.g., Tom pays Mechanic $500 to fix his truck’s transmission. Tom incurs a $20 loss in gas money spent in order to get to Mechanic’s repair shop. Mechanic fails to fix Tom’s truck and negligently catches the truck on fire destroying it. Tom can only recover $500 in restitution damages for the benefit that he conferred to Mechanic.
A party cannot recover both
expectation and restitution damages; typically, the plaintiff must elect one or the other.
Liquidated damages are
set forth in the terms of the contract and expressly state an
amount due upon breach.
Courts are wary in awarding liquidated damages that are punishing in nature and will only do so if:
The amount of liquidated damages was reasonable at the time of contracting;
AND
Actual damages from the breach would be uncertain in amount and difficult to prove.
Punitive damages are awarded to
punish the defendant.
Punitive damages are rarely available in contract actions. Some states allow punitive damages to punish fraud, violations of a fiduciary duty, or acts of bad faith.
Under the Second Restatement, punitive damages are
NOT recoverable unless the conduct constituting the breach is also a tort for which punitive damages can be recovered.
