Unit 1 Discussion - Discussion Throughout this course many...

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Discussion Throughout this course, many discussion opportunities come up where you need to respond to other people's opinions and comments. Address the Discussion topics after you have completed your reading. Topic 1: Consequential Damages – You be the Judge This Discussion will assess how well you understand contract remedy of Expectation Interest. Begin by reading the facts of the case (Bi-Economy Market, Inc. v. Harleysville Ins. Co. of New York), then decide: Is Bi-Economy entitled to consequential damages for the destruction of its business? Read the arguments for both sides carefully before formulating your decision. Be sure to reference (with proper APA citation) applicable laws to support your decision. Remember that this is a discussion, so keep your responses succinct and focused on the point. Respond substantively to at least two of your colleagues. Hello Professor and classmates: There are many reasons why I believe that Bi-Economy is not entitled to consequential damages for the destruction of its business. Bi-Economy permits consequential damages, so as to award the insured the benefit of its bargain, by placing him in as good position as he would have been in had the insurer acted in good faith. Secondly, Bi-Economy made one significant limitation on these damages: Only those costs that would have been considered by the parties prior to contracting may be recovered by the insured. While the Court of Appeals stated in Bi-Economy that consequential damages would be restricted by what would have been contemplated by the parties when they signed the contract, the lower courts have interpreted this holding broadly. Thirdly, Bi-Economy itself attempted to resolve the tension between consequential damages (recoverable for breach of contract) and punitive damages (recoverable for egregiously tortious conduct), and pointed out that punitive damages are measured by the insurer's conduct rather than the position of the insured. Conversely, when assessing consequential damages, the insured is the focus. Consequential damages compensate the insured for an undesirable shift in position as a result of the insurer's breach of the implied covenant of good faith. As such, in the end, the difference between consequential and punitive damages might be more a matter of form than substance. Despite this expansive interpretation of the Bi-Economy rule, a critical difference between punitive and consequential damages remains when it comes to the insured's required proof: To recover punitive damages, insureds appeal to the sensibilities (and outrage) of judges and juries. While some limitations exist on the award of such damages (in the rare instances when they are evoked in the coverage context), those limits are difficult to predict, and even when applied, they can leave hefty awards intact. Further, punitive damages are largely unknown until the jury returns its verdict.
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Chris Burchfield References Beatty, J. F., Samuelson, S. S., & Bredeson, D. A. (2013). Introduction to business law (4th ed.).
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