Sunday, January 08, 2006



IN a suit for breach of contract, the nonbreaching party often has a choice of remedies for material breach; damages, specific performance, rescission and restitution, quasi-contract, and a tort action. Where these remedies are inconsistent in legal effect (for example, rescission and damages), the P must elect a remedy he desires. The remedy most frequently sought for breach of contract is an action at law for damages resulting from the breach.

Types of damages; the basis types of damages are:

compensatory damages- money damages given on the theory that the injured party should be placed in the same position as if the contract had been properly performed, so that the P receives the benefit of his bargain.

punitive damages-these are generally not recoverable for breach of contract

Nominal damages-when no monetary loss is proven, the non-breaching may recover a nominal amount of money to reflect the injury from the mere fact of breach.


In some cases, the standard measure of damages does not provide full compensation for the loss of the benefit of the bargain. IN many cases, special circumstances can aggravate the ecnomic loss to one party when the other party fails to perform. WHere such special circumstances were known to both parties at the time the contract was made, the breaching party will be deemed to have assumed the liability for such additional damages in the event of breach. Such damages must have been foreseeable.


Contracts to sell or lease property: Because a contract is generally a bargain, relief for breach is generally the "benefit of the bargain" or what the promisee expected to receive, measured in money compensation, had the promisor performed. This is the promisee's "expectation interest." Contracts for the sale of goods are governed by the UCC. Under UCC sections 2-708 and 2-713, the standard measure of damages for breach of contract for the sale of goods is the difference between the contract price and the market price for the goods at the time and place where the goods were to be delivered, regardless of which party breached. This standard measure is not inflexible; courts have a variety of remedies available to compensate promisees and do justice. For example, if a seller refuses to deliver the goods contracted for, the buyer has the right to cover, or purchase substitute goods from other sources, and the seller would have to pay the cost of substituted goods. (UCC 2-712) Contracts involving real estate have other special remedy provisions. Breach of contract remedies are studied in depth in courses on contract law, but this section provides examples of how courts use the law to do substantial justice.


Contracts for personal services receive special consideration because a critical aspect of such contracts is the contracting parties' expectations for the services of the particular person involved or the particular employment specified. For example, a wrongfully terminated employee has a duty to mitigate damages by seeking alternative employment, but she need not accept just any employment.


Construction contracts frequently present difficult remedy problems when breached because costs, damages and values can vary so significantly. For example, if the breach occurs when the project is nearly complete, but the project has become nonviable for reasons no related to the breach, is it fair, or rational, to require completion of the project? Or if the cost to complete a nearly completed project is significant, but the value added by the completion is minimal, how should the court determine the appropriate damages for breach?


Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.


Another measure of damages for breach of contract is the injured party's expenditures made in preparation for performance or in performance (reliance interest). This amount must be offset by any loss the injured party would have suffered had the contract been performed.


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