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Chapter 12

Chapter 12 Notes

7 Pages
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Department
Law and Business
Course Code
LAW 122
Professor
Kernaghan Webb

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Chapter 12: Contractual Remedies
One or more remedies may be available if a contract is breached. Refer to Figure 12.1 pg 258.
DAMAGES
In the vast majority of cases, the remedy for a breach of contract is damages.
oDamages: is an award of money that is intended to cure a wrongful event, such as a breach of
contract.
The nature of the remedy needs to be stressed. Expect in rare cases, the plaintiff is not entitled
to receive the exact thing that it expected to get under the agreement. Only entitled to
monetary value of that thing.
E.g. if I agree to sell my car to you, but later break my promise after you have paid
the price, you are probably not entitled to get the car itself, but are entitled to the
monetary value of that car.
There are several reasons why courts usually award only monetary damages for a breach of
contract.
i.The courts of law historically did not have the power to compel a defendant to do
anything other than pay money.
ii.Contracts traditionally were seen as commercial arrangements b/t business people.
Today $$ is the only thing that matters in the business world.
iii.Especially in the business world, it would often be inconvenient to award something
other than monetary damages.
Expectation Damages
There are many different measures of relief, or ways in which the courts can calculate the
amount of money that the plaintiff is entitled to recover from the defendant.
The most common measure of relief in contract law is expectation damages.
oExpectation Damages: represent the monetary value of the benefit that the plaintiff expected
to receive under the contract.
Are forward-looking b/c they are intended to place the plaintiff in the position that it
expected to be in after the contract was properly performed.
Consider the difference b/t compensatory damages; which are backward-looking (chpt3) and
expectation damages:
Backward-looking damages are easily justified. They allow the plaintiff to recover the
value of something. E.g. favourable reputation or a broken leg, that it previously
enjoyed, but lost as a result of the defendants wrongful act.
Forward-looking damages go further allows the plaintiff to recover the value of
something that is never previously enjoyed, but merely expected to receive under the
contract with the defendant. Expectation damages therefore provide an assurance
that if a promise is not actually fulfilled, the innocent party will at least be able to
recover the monetary value of the promise.
Refer to Figure 12.2 Calculations of Expectation Damages pg. 259
E.g. suppose you agree to pay $5,000 for a computer that is really worth $7,000. You
expect to make a profit of $2,000. However, if the vendor breaches the contract by
refusing to deliver the computer, and if you have not yet paid the price you are
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Chapter 12: Contractual Remedies
entitled to receive $2,000. And if you paid the entire price ($5,000) before the breach,
you will be entitled to $7,000 cash. In either event, you are entitled to enjoy the
$2,000 profit.
In some situations, however, the exercise is much more difficult. We will consider five issues:
i. Difficulty of Calculation:
oExpectation damages are usually available even if they are very difficult to calculate.
E.g. In one famous case, the defendant breached a contract by depriving the plaintiff
of an opportunity to win a beauty contest. While the plaintiffs actual chance of
winning the contest was highly speculative, the court awarded expectation damages
based on its best guess as to how she would have fared in the competition.
oIn contrast, if the calculation of the plaintiffs loss is not merely difficult, but entirely
speculative, a court will not award damages court of law not a place for wild
guesses.
ii. Cost of Cure or Loss of Value:
oSometimes it is difficult to decide exactly what the plaintiff expected to receive
from the defendant there may be a question as to whether the plaintiff expected
to receive a service or the value of the end-product of that service.
oE.g. Case Brief 12.1: Plaintiff rented a piece of land to the defendant for
$105,000. The defendant operated a sand and gravel mine, but is required to
level the land at the end of the least. However, the defendant left huge craters on
the property cost $60,000 to fill the holes, but the land only worth $12,000 if
leveled. The plaintiff claimed expectation damages should be measured by cost of
cure ($60,000 to fix the land), but defendant said it should be measured by loss of
value ($12,000). The court agreed with the plaintiff thus awarded him $60,000.
oHowever, judges usually refuse to award damages on acost of cure basis if the
difference b/t the cost of cure and the benefits of the cure is reasonably large.
Swimming Pool E.g. pg 261-262.
iii. Intangible Loss:
oExpectation damages are difficult to calculate when the plaintiff suffers an intangible
loss as a result of the defendants breach.
oIntangible Loss: is a loss that does not have any apparent economic value. E.g. the
anger, frustration, or disappointment that may occur when a promise is broken.
oHistorically, the courts refuse to award damages for intangible losses the courts did
not traditionally feel comfortable assigning dollar figures to personal emotions.
oRecently, the courts have started to recognize thatpeace of mind is one of the
things that a person may expect to receive under a contract.
Damages may be available if, contrary to the plaintiffs expectation, the
defendant performed the contract in a way that caused distress.
E.g. Awarded expectation damages for a ruined holiday
However, the courts refuse to award damages for the humiliation or dejection
they may feel as a result of being unfairly fired from a job.
iv.Remoteness:
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Description
Chapter 12: Contractual Remedies One or more remedies may be available if a contract is breached. Refer to Figure 12.1 pg 258. D AMAGES In the vast majority of cases, the remedy for a breach of contract is damages. o Damages: is an award of money that is intended to cure a wrongful event, such as a breach of contract. The nature of the remedy needs to be stressed. Expect in rare cases, the plaintiff is not entitled to receive the exact thing that it expected to get under the agreement. Only entitled to monetary value of that thing. E.g. if I agree to sell my car to you, but later break my promise after you have paid the price, you are probably not entitled to get the car itself, but are entitled to the monetary value of that car. There are several reasons why courts usually award only monetary damages for a breach of contract. i. The courts of law historically did not have the power to compel a defendant to do anything other than pay money. ii. Contracts traditionally were seen as commercial arrangements bt business people. Today $$ is the only thing that matters in the business world. iii. Especially in the business world, it would often be inconvenient to award something other than monetary damages. Expectation Damages There are many different measures of relief, or ways in which the courts can calculate the amount of money that the plaintiff is entitled to recover from the defendant. The most common measure of relief in contract law is expectation damages. o Expectation Damages: represent the monetary value of the benefit that the plaintiff expected to receive under the contract. Are forward-looking bc they are intended to place the plaintiff in the position that it expected to be in after the contract was properly performed. Consider the difference bt compensatory damages; which are backward-looking (chpt3) and expectation damages: Backward-looking damages are easily justified. They allow the plaintiff to recover the value of something. E.g. favourable reputation or a broken leg, that it previously enjoyed, but lost as a result of the defendants wrongful act. Forward-looking damages go further allows the plaintiff to recover the value of something that is never previously enjoyed, but merely expected to receive under the contract with the defendant. Expectation damages therefore provide an assurance that if a promise is not actually fulfilled, the innocent party will at least be able to recover the monetary value of the promise. Refer to Figure 12.2 Calculations of Expectation Damages pg. 259 E.g. suppose you agree to pay $5,000 for a computer that is really worth $7,000. You expect to make a profit of $2,000. However, if the vendor breaches the contract by refusing to deliver the computer, and if you have not yet paid the price you are 1 of 7 www.notesolution.com
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