sec 2 outline - 1.2 Limitations on Expectation Damages...

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1.2 Limitations on Expectation Damages General: Mitigation refers to the non breaching party’s obligation to limit his damages when notified of the other party’s breach. Its purpose is to ensure fairness to the breacher. I. Mitigation/Causation: Non-Breacher must try to reduce amount of damages a. Construction Contract i. Rule : By Owner’s Breach and by Stopping the Construction , builder recovers contract price less cost of savings for non-completion, IF ANY 1. Expectancy Damages = K – Cost of Savings for Non-Completion ii. Rockingham Co v Luten Bridge Co- Builder continued with construction of bridge after the county told them to stop (commissioner controversy) 1. Damages: Expenses to Date + Profit a. Luten did not cease construction b. Construction companies can eliminate their costs because their employees are on a per job basis, they are terminated if job is terminated 2. Court: did not award costs incurred after notification of breach 3. Ratio Decidendi: When you receive notice of breach by other party, then the aggrieved party has an immediate duty to reasonably mitigate damages a. If you don’t reduce your injury my mitigation, then you produce your own injury b. A constructor is obligated to stop construction when notified of breach c. Constructors can’t pile up unnecessary damages iii. Kearsarge Computer Inc v Acme Staple Co 1. Kearsage did data processing for Acme (employer) under 1 year contract, half way through the year, Acme terminated contract, Kearsage sued for damages a. Employer wants to subtract: i. Savings realized by Kearsage from breach ii. New business gained by Kearsage after breach 2. Appeals: breach did not produce substantial savings; so no error a. Savings must be SIGNIFICANT to be deducted i. No reduction of the K price because no savings for non completion b. Profits from new construction Ks can’t be deducted unless they couldn’t have been realized without breach i. Court presumes this type of business is expandable ii. Could have taken on new business regardless of breach 3. HARMONIZATION: Kearsage can’t fire employees, so they cant reduce their costs (Mitigation not possible) b. Personal Service Contract i. Goal : Fairness to make things equal, not put a party in better of a position ii. Rule : By Employer’s Breach and by getting Comparable Employment , employee recovers contract price less savings from alternate employment less possible offsets from collateral sources plus incidental damages
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a. Employer’s Breach: Employee obligated to find other employment but may refuse a job that is inferior or different 2. Employee’s Breach: Employer obligated to find other comparable employee. a. If only available alternative is more costly, employer can collect difference from employee 3. Comparable Employment = same type of work and same type of rank 4. Same pay is not required, can recover the difference through damages iii. Parker v Twentieth Century Fox Film- Shirely MacLaine 1. Facts: Shirley Ked to star in “Bloomer Girl” but studio backed out and offered
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This note was uploaded on 04/18/2008 for the course LAW Contracts taught by Professor G.flint during the Fall '07 term at Saint Mary's University Texas.

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sec 2 outline - 1.2 Limitations on Expectation Damages...

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