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Chapter 12

LAW122- Chapter 12- Contractual Remedies.docx

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Ryerson University
Law and Business
LAW 122
Theresa Miedema

LAW122 – Chapter 12 – Contractual Remedies Damages pg. 275 Damages: is an award of money that is intended to cure a wrongful event, such as a breach of contract  The nature of that remedy needs to be stressed, Except in rare cases, the plaintiff is not entitled to receive that exact thing that it expected to get under the agreement – only entitled to monetary value  Example: I agree to sell my car to you, but later break my promise after you have paid the price, you are probably not entitles to get the car itself but rather the monetary value of the car Exception Damages  Exception damages: represent the monetary value of the plaintiff expected to receive under the contract  Expectation are for-looking because they are intended to place the plaintiff in the position that is expected to be in after the contract was properly performed  Compensatory damages are backward-looking  Differences:  Backward looking damages – allow the plaintiff to recover the value of something, such as a favourable reputation or a properly functioning machine, that it previously enjoyed but lost as a result of the defendant’s wrongful act  Forward-looking damages allow the plaintiff to recover the value of something that it never previously enjoyed but merely expected to receive under its contract with the defendant  Calculation of Expectation Damages Expectation Damages = Expected Benefits under the Contract – Costs under Contract Issues with Expectation Damages pg. 278 1. Difficulty if Calculation  If the calculation of the plaintiff’s loss is not merely difficult, but entirely speculative, a court will not award damages 2. Cost of Cure or Loss  May be question as to whether the plaintiff expected to receive a service or the value of the end product of that service 3. Alternative Problems  As a general rule, expectation allows the plaintiff to fully recover the anticipated benefits of the contract  Difficult may arise, however if the contract allowed the defendant to perform in a variety of ways 4. Intangible Losses  Intangible loss is a loss that does not have any apparent economic value  Examples: anger, frustration, sadness, or disappointment that may occur when a promise is broken  Those losses are real, but do not carry a price in the marketplace  Expectation damages have been awarded for the disappointment by a ruined holiday and for the grief that was experienced when a beloved pet was suffocated to death 5. Remoteness  The plaintiff cannot recover expectation damages for every loss that it suffers after the defendant’s breach  The lost must have been caused by the breach  The loss must not the remote from the breach  A loss is remote if it would be unfair hold the defendant legally responsible for it  A loss is not remote if the defendant either should have known or actually did know that it was the sort of loss that might occur if the contract was breached. The test has two parts:  Liability may be imposed if a reasonable person should have known that the plaintiff’s loss might result from a breach  Liability may be imposed if the defendant actually know that the plaintiff’s loss might result from the breach 1 LAW122 – Chapter 12 – Contractual Remedies  Remoteness is a principle of fairness  Applied when the parties created their contract, not to the time when the defendant committed the breach, nor to the time when the judge hears the case 6. Mitigation of Damages  Mitigation occurs when the plaintiff takes steps to minimize the losses flowing from the defendant’s breach  There is not really a duty in the sense of something that must be done – the plaintiff is not required to mitigate  The plaintiff is responsible only for taking reasonable steps to mitigation a loss – Expectation damages will not be denied if the only way to mitigation a loss was unreasonably difficult, inconvenient or risky.  Damages are denied only to the extent that the plaintiff unreasonably failed to mitigate  The plaintiff can recover the costs associated with mitigation Reliance Damages pg. 283  Reliance damages represent the monetary value of the expenses and opportunities that the plaintiff wasted under the contract  Opposite of expectation damages  Comparing reliance and expectation:  Expectation: “ Give me what I expected to get. Put me in a position that I would have enjoyed if the contract had been properly performed” – forward looking  Reliance: “Give me what I lost. Put me in a position that I would have enjoyed if I had not wasted resources under this contract.” – backward looking  Reliance damages are representing the cost that it incurred, If the plaintiff wants the benefit, it must be willing to pay the cost.  Only reward to the extent that a contract is not unprofitable – the plaintiff cannot use reliance damages to avoid a loss that it would have suffered if the contract had been performed Account of Profits  The usual remedy for breach of contract is compensation.  Damages are
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