Contracts II - Contracts II By Jeff Amato Prof. Weiskopf I....

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Contracts II By Jeff Amato Prof. Weiskopf I. Remedies A. Measuring Expectation 1. Lost Expectancy = Lost Value + Other Loss– Cost avoided – loss avoided Cost avoided = cost of complete performance – cost of reliance Suppliers damages = cost of reliance – loss avoided + profit + other loss Suppliers damages = contract price – redisposition price + other loss Recipients damages = replacement price – contract price + other loss The dollar amount that would put the non-breaching party in as good of a position had the contract been performed. “Benefit of the bargain”. Consequential Damages – Damages which a reasonable person, present at the time of contract formation would not foresee as a natural consequence of the breach. In order to recover the injured party must show there was some reason the parties were on notice at the time of contract formation that the injured party would suffer an otherwise unforeseeable injury. a. Lost Value = The value that the innocent party never received as a result of the breach, computed by taking the full value of performance and subtracting the amount actually received. o Price of the contract for the builder o For the owner: Cost of a Cover/Substitute, or Reasonable Value, market value (LV= Cover- loss avoided(K price)) + other loss b. Other Loss = o Incidental damages – Costs incurred after the breach, as long as they are reasonably incurred then they can be recovered o Personal, Property damage c. Cost avoided = o Contract Price not paid o Cost of complete performance – cost of reliance (expended money – loss avoided (subject to possibility of loss volume)) o Variable overhead, not general overhead d. Loss Avoided = o Seller selling goods, covering. o If the seller or buyer could have covered but did not then the court would imply the loss avoided by a market price formula. 1
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2. Cover a. When the buyer covers, it is the sellers burden to show that the cover was unreasonable. b. Market price is a hypothetical, while cover is an actual price c. In employee employer relationships, substitute work is considered cover. d. In independent contractor relationships, it is presumed that they have the ability to take on more jobs then one, so substitute work is not a cover. e. Buyer does not have to cover but if they do not they cannot recover consequential damages, see foreseeability requirement. 3. Loss Volume Seller a. A seller, who is the innocent party, may be able to prove that a transaction was not a cover but a usual transaction that would have happened anyway. o Capable of o Profitable o Would have made the transaction anyway o Example; Car dealership. b. Π is entitled to loss profits even if they resold the item for the same price under this theory. c.
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This note was uploaded on 02/15/2008 for the course LAW 2000 taught by Professor Kniffin during the Spring '02 term at St. Johns Duplicate.

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Contracts II - Contracts II By Jeff Amato Prof. Weiskopf I....

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