Contracts II Outline (Blake)

Contracts II Outline (Blake) - Contracts II Professor...

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Contracts II Professor Martin Spring 2009 I. Limitations on Damages a. Certainty – a court will only give damages for future loss that is reasonably certain to occur i. Must be reasonably certain of the damages that will occur– don’t have to know to the penny but the courts can estimate ii. Uncertainty does not preclude recovery iii. Loss for future damages are permitted if: 1. It is demonstrated with certainty that such damages have been caused by the breach 2. The alleged loss must be capable of proof with reasonable certainty iv. Kenford Co. v. County of Erie 1. Plaintiffs entered into a contract to build a stadium for the county of Erie 2. The county backed out and plaintiffs sued for loss of expected profit for the next 20 years 3. It was a new business so there was no history to provide the court with an estimation of damages 4. Might need expert testimony to prove was is reasonably expected as far as loss of future profits are concerned v. Test: Reasonable certainty vi. Restatement § 352: Uncertainty as a Limitation on Damages 1. Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty b. Foreseeability – a party is only entitled to relief if the possibility of future damages is known to the parties at the time they made the contract, and as a probable result of the breach (from Hadley v. Baxendale) i. Hadley v. Baxendale 1. Plaintiff’s shaft broke on a mill and he sent a carrier to get a new one 2. The carrier was delayed and the plaintiff sued for loss of profits from the delay in getting a new shaft ii. Foreseeability is marked from the time of CONTRACT FORMATION, not the time of the breach iii. Restatement § 352: Unforeseeability and Related Limitations on Damages 1. Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. 2. Loss may be foreseeable as a probable result of a breach because it
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follows from the breach. a. In the ordinary course of events, or b. As a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know. 3. A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstance justice so requires in order to avoid disproportionate compensation. iv. UCC § 2-715 (2) (Hadley rule modified to include the requirement of mitigation) 1. Consequential damages resulting from the seller’s breach include: a. Any loss resulting from general or particular requirements and needs of which the seller at the time of contracting had reason to know and which could no reasonably be prevented by cover or otherwise 2. From the comments: “Although the older rule at common law which made the seller liable for all consequential damages of which he had “reason to know” in advance is followed,
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Contracts II Outline (Blake) - Contracts II Professor...

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