Other Measures of Recovery

When the non-breaching party cannot recover expectancy or benefit of the bargain damages due to, for example, a lack of certainty, recovery can still be had under a "reliance" measure of damages. Put simply, in that case, the non-breaching party can recover expenses that were foreseeable at the time of entering into the contract such as expenses of preparation or part performance. R2d § 3491 provides:

As an alternative to "expectation damages," the injured party has a right to damages based on his reliance interest, including expenditures made in preparation for performance or in performance, less any loss that the party in breach can prove with reasonable certainty the injured party would have suffered had the contract been performed.

The next case illustrates the reliance measure in action in a case where the breach of contract resulted in a loss of uncertain profits and, thus, expectancy damages could not be awarded.

Security Stove & Manufacturing v. American Railway Express, Court of Appeals of Missouri 227 Mo. App. 175, 51 S.W.2d 572 (1932)

Bland, J.

[1]This is an action for damages for the failure of defendant to transport, from Kansas City to Atlantic City, New Jersey, within a reasonable time, a furnace equipped with a combination oil and gas burner. The cause was tried before the court without the aid of a jury, resulting in 578 a judgment in favor of plaintiff in the sum of \$801.50 and interest, or in a total sum of \$1,000.002. Defendant has appealed.

[2]The facts show that plaintiff manufactured a furnace equipped with a special combination oil and gas burner it desired to exhibit at the American Gas Association Convention held in Atlantic City in October, 1926. The president of plaintiff testified that plaintiff engaged space for the exhibit for the reason "that the Henry L. Dougherty Company was very much interested in putting out a combination oil and gas burner; we had just developed one, after we got through, better than anything on the market and we thought this show would be the psychological time to get in contact with the Dougherty Company"; that "the thing wasn't sent there for sale but primarily to show"; that at the time the space was engaged it was too late to ship the furnace by freight so plaintiff decided to ship it by express, and, on September 18th, 1926, wrote the office of the defendant in Kansas City, stating that it had engaged a booth for exhibition purposes at Atlantic City, New Jersey, from the American Gas Association, for the week beginning October 11th; that its exhibit consisted of an oil burning furnace, together with two oil burners which weighed at least 1,500 pounds; that, "In order to get this exhibit in place on time it should be in Atlantic City not later than October the 8th. What we want you to do is to tell us how much time you will require to assure the delivery of the exhibit on time."

[3]Mr. Bangs, chief clerk in charge of the local office of the defendant, upon receipt of the letter, sent Mr. Johnson, a commercial representative of the defendant, to see plaintiff. Johnson called upon plaintiff taking its letter with him. Johnson made a notation on the bottom of the letter giving October 4th, as the day that defendant was required to have the exhibit in order for it to reach Atlantic City on October 8th.

[4]On October 1st, plaintiff wrote the defendant at Kansas City, referring to its letter of September 18th, concerning the fact that the furnace must be in Atlantic City not later than October 8th, and stating what Johnson had told it, saying: "Now Mr. Bangs, we want to make doubly sure that this shipment is in Atlantic City not later than October 8th and the purpose of this letter is to tell you that you can have your truck call for the shipment between 12 and 1 o'clock on Saturday, October 2nd for this." On October 2nd, plaintiff called the office of the express company in Kansas City and told it that the shipment was ready. Defendant came for the shipment on the last mentioned day, received it and delivered the express receipt to plaintiff. The shipment contained 21 packages. Each package was marked with stickers backed with glue and covered with silica of soda, 579 to prevent the stickers being torn off in shipping. Each package was given a number. They ran from 1 to 21.

[5]Plaintiff's president made arrangements to go to Atlantic City to attend the convention and install the exhibit, arriving there about October 11th. When he reached Atlantic City he found the shipment had been placed in the booth that had been assigned to plaintiff. The exhibit was set up, but it was found that one of the packages shipped was not there. This missing package contained the gas manifold, or that part of the oil and gas burner that controlled the flow of gas in the burner. This was the most important part of the exhibit and a like burner could not be obtained in Atlantic City.

[6]Wires were sent and it was found that the stray package was at the "over and short bureau" of defendant in St. Louis. Defendant reported that the package would be forwarded to Atlantic City and would be there by Wednesday, the 13th. Plaintiff's president waited until Thursday, the day the convention closed, but the package had not arrived at the time, so he closed up the exhibit and left. About a week after he arrived in Kansas City, the package was returned by the defendant.

[7]Bangs testified that the reasonable time for a shipment of this kind to reach Atlantic City from Kansas City would be four days; that if the shipment was received on October 4th, it would reach Atlantic City by October 8th; that plaintiff did not ask defendant for any special rate; that the rate charged was the regular one; that plaintiff asked no special advantage in the shipment; that all defendant, under its agreement with plaintiff was required to do was to deliver the shipment at Atlantic City in the ordinary course of events; that the shipment was found in St. Louis about Monday afternoon or Tuesday morning; that it was delivered at Atlantic City at the Ritz Carlton Hotel, on the 16th of the month. There was evidence on plaintiff's part that the reasonable time for a shipment of this character to reach Atlantic City from Kansas City was not more than three or four days.

[8]The petition upon which the case was tried alleges that plaintiff, on October 2d, 1926, delivered the shipment to the defendant; that defendant agreed, in consideration of the express charges received from plaintiff, to carry the shipment from Kansas City to Atlantic City, and to deliver the same to plaintiff at Atlantic City, New Jersey, on or before October 8th, 1926, the same being the reasonable and proper time necessary to transport said shipment to Atlantic City, in as good condition as when received . . .

* * *

That relying upon defendant's promise and the promises of its agents and servants, that said parcels would be delivered at 580 Atlantic City by October 8th, 1926, if delivered to defendant by October 4th, 1926, plaintiff herein hired space for an exhibit at the American Gas Association Convention at Atlantic City, and planned for an exhibit at said Convention and sent men in the employ of this plaintiff to Atlantic City to install, show and operate said exhibit, and that these men were in Atlantic City ready to set up this plaintiff's exhibit at the American Gas Association Convention on October 8th, 1926

That defendant, in violation of its agreement, failed and neglected to deliver one of the packages to its destination on October 8th, 1926.

That the package not delivered by defendant contained the essential part of plaintiff's exhibit which plaintiff was to make at said convention on October 8th, was later discovered in St. Louis, Missouri, by the defendant herein, and that plaintiff, for this reason, could not show his exhibit.

[9]Plaintiff asked damages, which the court in its judgment allowed as follows: \$147.00 express charges (on the exhibit); \$45.12 freight on the exhibit from Atlantic City to Kansas City; \$101.39 railroad and pullman fares to and from Atlantic City, expended by plaintiff's president and a workman taken by him to Atlantic City; \$48.00 hotel room for the two; \$150.00 for the time of the president; \$40.00 for wages of plaintiff's other employee and \$270.00 for rental of the booth, making a total of \$801.51.

[10]Defendant contends that its instructions in the nature of demurrers to the evidence should have been given for the reason that the petition and plaintiff's evidence show that plaintiff has based its cause of action on defendant's breach of a promise to deliver the shipment at a specified time and that promise is non-enforceable and void under the Interstate Commerce Act; that the court erred in allowing plaintiff's expenses as damages; that the only damages, if any, that can be recovered in cases of this kind, are for loss of profits and that plaintiff's evidence is not sufficient to base any recovery on this ground.

* * *

[11]We think, under the circumstances in this case, that it was proper to allow plaintiff's expenses as its damages. Ordinarily the measure of damages where the carrier fails to deliver a shipment at destination within a reasonable time is the difference between the market value of the goods at the time of the delivery and the time when they should have been delivered. But where the carrier has notice of peculiar circumstances under which the shipment is made, which will result in an unusual loss by the shipper in case of delay in delivery, the carrier is responsible for the real damage sustained from such delay if the notice given is of such character, 581 and goes to such extent, in informing the carrier of the shipper's situation, that the carrier will be presumed to have contracted with reference thereto. Central Trust Co. of New York v. Savannah & W. R. Co., 69 F. 683, 685.

[12]In the case at bar defendant was advised of the necessity of prompt delivery of the shipment. Plaintiff explained to Johnson the "importance of getting the exhibit there on time." Defendant knew the purpose of the exhibit and ought to respond for its negligence in failing to get it there. As we view the record this negligence is practically conceded. The undisputed testimony shows that the shipment was sent to the over and short department of the defendant in St. Louis. As the packages were plainly numbered this, prima facie, shows mistake or negligence on the part of the defendant. No effort was made by it to show that it was not negligent in sending it there, or not negligent in not forwarding it within a reasonable time after it was found.

[13]There is no evidence of claim in this case that plaintiff suffered any loss of profits by reason of the delay in the shipment. In fact defendant states in its brief:

The plaintiff introduced not one whit of evidence showing or tending to show that he would have made any sales as a result of his exhibit but for the negligence of the defendant. On the contrary Blakesley testified that the main purpose of the exhibit was to try to interest the Henry L. Dougherty Company in plaintiff's combination oil and gas burner, yet that was all the evidence that there was as to the benefit plaintiff expected to get from the exhibit.

As a matter of evidence, it is clear that the plaintiff would not have derived a great deal of benefit from the exhibit by any stretch of the imagination . . .

No where does plaintiff introduce evidence showing that the Henry L. Dougherty Company in all probability would have become interested in the combination oil and gas burner and made a profitable contract with the plaintiff.

[14]There is evidence that the exhibit was not sent to make a sale.

* * *

[15]Defendant contends that plaintiff "is endeavoring to achieve a return of the status quo in a suit based on a breach of contract. Instead of seeking to recover what he would have had, had the contract not been broken, plaintiff is trying to recover what he would have had, had there never been any contract of shipment;" that the expenses sued for would have been incurred in any event. It is no doubt, the general rule that where there is a breach of contract the party suffering the loss can recover only that which he would have had, had the contract not been broken, and this 582 is all the cases decided upon which defendant relies, including C., M. & St. P. Ry. v. McCaull-Dinsmore Co., 253 U.S. 97, 100, 40 S.Ct. 504, 64 L.Ed. 801 (1920). But this is merely a general statement of the rule and is not inconsistent with the holdings that, in some instances, the injured party may recover expenses incurred in relying upon the contract, although such expenses would have been incurred had the contract not been breached.

[16]In Sperry et al. v. O'Neill-Adams Co., 185 F. 231 (1911), the court held that the advantages resulting from the use of trading stamps as a means of increasing trade are so contingent that they cannot form a basis on which to rest a recovery for a breach of contract to supply them. In lieu of compensation based thereon the court directed a recovery in the sum expended in preparation for carrying on business in connection with the use of the stamps. The court said, loc. cit. 239:

Plaintiff in its complaint had made a claim for lost profits, but, finding it impossible to marshal any evidence which would support a finding of exact figures, abandoned that claim. Any attempt to reach a precise sum would be mere blind guesswork. Nevertheless a contract, which both sides conceded would prove a valuable one, had been broken and the party who broke it was responsible for resultant damage. In order to carry out this contract, the plaintiff made expenditures which otherwise it would not have made . . . The trial judge held, as we think rightly, that plaintiff was entitled at least to recover these expenses to which it had been put in order to secure the benefits of a contract of which defendant's conduct deprived it.

* * *

[17]The case at bar was not to recover damages for loss of profits by reason of the failure of the defendant to transport the shipment within a reasonable time, so that it would arrive in Atlantic City for the exhibit. There were no profits contemplated. The furnace was to be shown and shipped back to Kansas City. There was no money loss, except the expenses, that was of such a nature as any court would allow as being sufficiently definite or lacking in pure speculation. Therefore, unless plaintiff is permitted to recover the expenses that it went to, which were a total loss to it by reason of its inability to exhibit the furnace and equipment, it will be deprived of any substantial compensation for its loss. The law does not contemplate any such injustice. It ought to allow plaintiff, as damages, the loss in the way of expenses that it sustained, and which it would not have been put to if it had not been for its reliance upon the defendant to perform its contract. There is no contention that the exhibit would have been entirely valueless and whatever it might have accomplished defendant knew of the circumstances and ought to respond for whatever damages plaintiff suffered. In cases of this kind the method 583 of estimating the damages should be adopted which is the most definite and certain and which best achieves the fundamental purpose of compensation. 17 C. J. p. 846; Miller v. Robertson, 266 U.S. 243, 257, 45 S.Ct. 73, 78, 69 L.Ed. 265. Had the exhibit been shipped in order to realize a profit on sales and such profits could have been realized, or to be entered in competition for a prize, and plaintiff failed to show loss of profits with sufficient definiteness, or that he would have won the prize, defendant's cases might be in point. But as before stated, no such situation exists here.

[18]While, it is true that plaintiff already had incurred some of these expenses, in that it had rented space at the exhibit before entering into the contract with defendant for the shipment of the exhibit and this part of plaintiff's damages, in a sense, arose out of a circumstance which transpired before the contract was even entered into, yet, plaintiff arranged for the exhibit knowing that it could call upon defendant to perform its common law duty to accept and transport the shipment with reasonable dispatch. The whole damage, therefore, was suffered in contemplation of defendant performing its contract, which it failed to do, and would not have been sustained except for the reliance by plaintiff upon defendant to perform it. It can, therefore, be fairly said that the damages or loss suffered by plaintiff grew out of the breach of the contract, for had the shipment arrived on time, plaintiff would have had the benefit of the contract, which was contemplated by all parties, defendant being advised of the purpose of the shipment.

The judgment is affirmed.

All concur.

B.THE RESTITUTIONARY INTEREST

Another way of measuring the plaintiff's damages is to ask "what is the value of the benefit the plaintiff conferred upon the defendant?" We refer to this as the plaintiff's restitutionary interest. Just as a criminal defendant may have to make restitution of any gains from her crime, a contract breacher may have to make restitution of any gains from the contract he breached. Under the old rules of pleading, the plaintiff would ask for "rescission and restitution," the breach giving her the right to rescind the contract and take back any benefits she had conferred on the defendant.

In a simple case where all the plaintiff has done is make a payment to the defendant, calculating her damages on a restitution basis would give the same recovery as would calculating her damages on a reliance basis. In most cases, however, the plaintiff is better off with a reliance-based recovery because the restitution measure will allow the plaintiff to recover 584 only those expenditures which directly benefitted the defendant, whereas the reliance measure will allow the plaintiff to recover all her expenditures, including payments made to third parties. For example, in Security Stove, a restitution measure would have allowed the plaintiff to recover only the freight charges, whereas a reliance measure allowed it to recover hotel charges, transportation costs of the individuals, etc.

Note that the election of quantum meruit claims rather than expectancy damages is that of the non-breaching party. The plaintiff is entitled to have her damages calculated using whichever measure gives her the largest recovery. There will be rare occasions when the restitution measure gives the plaintiff more in damages because the benefit that the defendant received was more than the cost the plaintiff incurred to confer that benefit. The case that follows is one of those rare cases.

Southern Painting Company of Tennessee v. United States, ex rel. Silver, United States Court of Appeals, Tenth Circuit, 222 F.2d 431 (1955)

Huxman, J.

[1]This is an appeal by the defendants, Southern Painting Company of Tennessee, Inc., and the United Pacific Insurance Company, from a judgment of \$13,000 rendered by the United States District Court for the District of Kansas in favor of the appellee, E. M. Silver, doing business as Silver Plumbing and Heating, in an action by the United States for the use of E. M. Silver, under the Miller Act, 40 U.S.C.A. § 270a, etc.

[2]The complaint alleged that Southern Painting Company of Tennessee, Inc., herein called Southern, hired Silver as a subcontractor to furnish all labor, material and supervision in connection with the plumbing and heating specifications under two contracts which Southern had with the United States; that after he had practically completed such work under the contract, Southern breached the contract by refusing to allow him to finish the work; that because of such breach he was entitled to sue for the reasonable value of the work he had performed under quantum meruit. He asked for judgment in the sum of \$72,000.3

[3]In its answer Southern alleged that Silver wrongfully breached the contract, forcing Southern at great cost to get another contractor to complete the work; that Silver had been paid more than his services were worth; that Silver had entered into a settlement with Southern as to the portion of work covered by Contract 999, and that the action was in the 585 nature of a breach of contract and as such could not be maintained under the Miller Act; hence the court was without jurisdiction.

[4]The terms of the contract are without dispute and only a short reference will be made thereto. Southern held two contracts with the Government, No. ENG 999 and ENG 1052 for rehabilitation work on Government camps near Salina. Under the subcontract with Silver, he was to furnish all labor and material necessary to do the plumbing and heating work under the two contracts. Southern agreed to reimburse Silver for all material, labor, taxes, insurance, etc., and agreed to purchase tools and equipment necessary to do the work. Silver was to receive \$6,000 lump sum for the work under Contract 999 and \$4,000 lump sum for work under Contract 1052, plus a fair percentage of the net profit on all additional extra plumbing and heating work.

[5]The parties are in disagreement as to who breached the contract. Southern claimed Silver did. It is sufficient to say that the court found that Southern breached the contract. We are satisfied that the evidence clearly sustains this finding. Apparently more than 90% of all the work under the subcontract was completed at the time of the breach by Southern. Silver had been paid \$7,000 of his fee under the subcontract. The court found the fair and reasonable value of Silver's services under the contract and found that in addition to what he had received he was entitled to receive an additional \$13,000, together with interest from July 15, 1952, until paid, that being the day on which Silver was wrongfully discharged, according to the court's finding.

* * *

[6]It is . . . contended that the judgment of the court is grossly excessive and that the findings and judgment are not supported by competent evidence. It is contended that plaintiff's Exhibit 24 offered to establish value of the services was improperly received in evidence. Without describing the exhibit in detail, we are inclined to agree that it was improperly received. But plaintiff's proof of the value of the services was not predicated alone on Exhibit 24. Delbert W. Robertson, an experienced plumbing contractor, testified for plaintiff as to the value of the services performed by plaintiff. His evidence was competent and was sufficient to sustain the findings of the court with respect to the reasonable value of the services. Neither do we feel that the record clearly shows that the court relied alone on Exhibit 24 in reaching its conclusions as to the value of Silver's services. We think the findings of the court and its judgment except as hereinafter pointed out find support in the record.

586 Problem 20-1

Buyer and Seller enter into a contract for the sale of a house for \$100,000. Seller breaches after Buyer has made a \$10,000 down payment. The house is worth \$100,000. How much is Buyer entitled to recover? Is Buyer's recovery based on a restitutionary or a reliance theory? Do we care?

Problem 20-2

Same facts as the immediately preceding problem except that the proof shows conclusively that the house was worth \$95,000. How much is Buyer entitled to recover? See Restatement (Second) § 349.

The cases and presentation above regarding reliance and restitution only scrape the surface of the doctrinal law in these areas, but is sufficient to acquaint you with these alternative remedial measures. To pursue these theories further, consider taking a "Remedies" course. For now, it is enough to just scratch the surface.

C.REVIEW OF DAMAGES

Problem 20-3

Owner puts her house on the market, asking \$180,000 for it. Buyer offers \$150,000 for the house. Owner accepts the offer, and they enter into a contract for the purchase and sale of the house at a price of \$150,000. In connection with the sale, Owner becomes obligated to pay Broker a commission of \$9,000. This commission is not refundable in the event of Buyer's breach. Buyer does in fact breach the contract. Seller pays Broker the commission. Evidence at trial shows that at the time title to the house was to be transferred, the fair market value of the house was \$140,000. (And Owner in fact re-sells the house for that price, paying no brokerage commission.) How much is Owner entitled to receive as damages?

Problem 20-4

Owner puts her house on the market, asking \$180,000 for it. Buyer offers \$150,000 for the house. Owner accepts the offer, and they enter into a contract for the purchase and sale of the house at a price of \$150,000. In connection with the sale, Owner becomes obligated to pay Broker a commission of \$9,000. This commission, however, is payable only in the event Buyer completes the sale and pays Owner the purchase price. Buyer breaches the contract. Seller does not pay Broker the commission. Evidence at trial shows that at the time title to the house was to be transferred, the fair market value of the house was 587 \$140,000. (And Owner in fact re-sells the house for that price, paying no brokerage commission.) How much is Owner entitled to receive as damages?

Problem 20-5

Owner puts her house on the market, asking \$180,000 for it. Buyer offers \$150,000 for the house. Owner accepts the offer, and they enter into a contract for the purchase and sale of the house at a price of \$150,000. The contract between Owner and Broker provides that if the sale is completed and Buyer pays Owner the purchase price, Owner will pay Broker a commission of \$9,000. This contract further provides (as is the custom in many parts of the country) that if Buyer breaches, Owner only has to pay broker half the commission (\$4,500). Buyer does in fact breach the contract. Seller pays Broker the \$4,500. Evidence at trial shows that at the time title to the house was to be transferred, the fair market value of the house was \$140,000. (And Owner in fact re-sells the house for that price, paying no brokerage commission.) How much is Owner entitled to receive as damages?

Problem 20-6

Developer enters into a contract with Paver for the paving of Developer's parking lot for a price of \$25,000. Developer breaches the contract at a time when Paver has spent \$12,000 on the job and received a total of \$10,000 in progress payments. If Paver had to finish the job, it would have cost her a total of \$19,000 (the \$12,000 she has already spent plus an additional \$7,000). The fair market value of the work Paver has done to date is \$11,000. How much is Paver entitled to receive in damages?

Problem 20-7

Landlord and Painter enter into a contract under the terms of which Painter will paint Landlord's building for a price of \$10,000. (Painter intends to do all the labor himself. No employees or subcontractors will be involved.) Landlord pays Painter a down payment of \$2,000, and Painter spends \$1,500 of it to purchase all the paint necessary for the job. Before Painter starts work, Underbid contacts Landlord and offers to do the job for \$7,000. Landlord takes her up on it and tells Painter to forget the gig. Painter attempts to return the paint and is told it cannot be returned because it is a custom color. Then he attempts to dispose of the paint and is told that he has to pay a \$50 fee to have it disposed of in an environmentally-responsible manner. Painter's brother-in-law offers to sneak the paint into the landfill at night in exchange for a \$7.29 six pack of Sam Adams, but Painter, perhaps because he has been inhaling too many fumes, declines the offer and pays the \$50. Painter is unable to find any other work to do during the six weeks he had set aside to do Landlord's job, so he takes his family to Disney World. The cost of the trip is \$3,800.

How much is Painter entitled to receive in damages?

588 Problem 20-8

When Trader made a killing in the stock market, she bought herself an airplane at a cost of \$300,000. Recently, the market has been even better to her, so she decided to buy a new plane. She hired Broker to sell the airplane for her and agreed to pay Broker a commission of \$20,000 in connection with the sale. The contract between Trader and Broker required Trader to pay the commission only if a buyer located by Broker actually completed the sale and Trader was paid for the plane. After several months of advertising and dozens of long-distance calls to potential buyers (all at Broker's expense), Broker found Buyer, who entered into a contract to purchase the plane for \$180,000.

After entering into the contract, Buyer realized that the fair market value of the plane was only \$150,000. He thereupon informed Trader that he would not honor his contract. Tired of fooling around, Trader hired Auctioneer to sell the plane at a public auction. Buyer was given notice of the sale and the plane was sold at auction for \$135,000. Auctioneer was paid a fee of \$2,000, and Broker never got his \$20,000 because the buyer he found (Buyer) never completed the deal.

Trader sued Buyer for breach of contract. At trial, there were two major issues: (1) Was the sale by auction made in good faith and in a commercially reasonable manner? (2) What was the market price of the airplane at the time and place for tender? On the latter issue, Broker, testifying for Trader, testified that the market price was \$130,000. Buyer's lawyer hired two appraisers. Highball said the airplane was worth \$200,000. Lowball said the airplane was worth \$140,000. Buyer's lawyer paid Lowball his fee, stamped his report "Confidential---Attorney's Work Product" and stuffed it in the file, never to see the light of day again. She hired Highball to testify at trial. The judge found as a fact that the market price of the airplane at the time and place for tender was \$155,000.

(a)How much should Trader recover in damages if the court finds that the sale was conducted in good faith and in a commercially reasonable manner?

(b)How much should Trader recover in damages if the court finds that the sale was NOT conducted in a commercially reasonable manner? (Consider this. If the sale is not commercially reasonable, should Trader be able to claim the \$2,000 auctioneer's fee as an element of incidental damages?)

589 D.PROBLEMS TO REVIEW ON YOUR OWN

Answers for these problems are on the pages following the problems. You'll get more out of the problems if you work them before you look at the answers.

1.Seller and Buyer enter into a contract for the sale of Seller's house to Buyer at a price of \$100,000. No real estate commissions or other expenses are involved in the sale. Buyer breaches and the court determines that the fair market value of the house is \$92,000. How much can Seller recover in damages?

2.Sailor and Contractor enter into a contract under the terms of which Contractor is to build a boathouse on Sailor's property for a price of \$5,000. Contractor breaches before any work has been done or any money has been paid. Sailor discovers that it will cost her \$6,500 to have the work done by another contractor. How much is Sailor entitled to recover as damages?

3.Sailor and Contractor enter into a contract under the terms of which Contractor is to build a boathouse on Sailor's property for a price of \$15,000. Contractor breaches before any work has been done, but after Sailor has paid Contractor an initial payment of \$5,000. Sailor discovers that it will cost her \$19,000 to have the work done by another contractor. How much is Sailor entitled to recover as damages?

4.Sailor and Contractor enter into a contract under the terms of which Contractor is to build a boathouse on Sailor's property for a price of \$8,000. Sailor repudiates before any work has been done or any money has been paid. Contractor proves that it would have cost her \$6,000 to build the boathouse. How much is Contractor entitled to recover as damages?

5.Sailor and Contractor enter into a contract under the terms of which Contractor is to build a boathouse on Sailor's property for a price of \$12,000. Sailor repudiates before any work has been done, but after Sailor has paid Contractor \$3,000 as a deposit. It is established that it would have cost Contractor \$10,000 to build the boathouse. How much is Contractor entitled to recover as damages?

6.Grower and Broker enter into a contract under the terms of which it is agreed that Broker will purchase Grower's wheat crop for a price of \$3.00 per bushel. At the time and place for delivery, the market price for wheat is \$3.25 per bushel. Broker waits for Grower to show up with her wheat. When Grower fails to show up, Broker investigates and determines that Grower has sold her crop elsewhere. Without unreasonable delay, Broker purchases some wheat to replace the wheat she had expected to get from Grower, but by the time she can act the price has gone up and she has to pay \$3.40 per bushel. How much (per bushel) is she entitled to recover in damages?

590 7.Grower and Broker enter into a contract under the terms of which it is agreed that Broker will purchase Grower's wheat crop for a price of \$3.00 per bushel. At the time and place for delivery, the market price for wheat is \$3.25 per bushel. Broker waits for Grower to show up with her wheat. When Grower fails to show up, Broker investigates and determines that Grower has sold her crop elsewhere. Broker gets so fed up she decides to quit the wheat business and become a beach bum. How much (per bushel) is she entitled to recover in damages?

8.Dealer agrees to buy Collector's Expressionist painting for \$2 million. Dealer repudiates the contract. Collector re-sells the painting in good faith and in a commercially reasonable manner to another art gallery for \$1.5 million and sues Dealer for breach of contract. At trial it is determined that the fair market value of the painting was \$1.8 million dollars. How much is Collector entitled to recover as damages?

9.Dealer agrees to buy Collector's Expressionist painting for \$2 million. Dealer repudiates the contract. The fair market value of the painting at the time it was to be delivered is \$1.8 million, but Collector decides she no longer wants to sell the painting, so she keeps it. How much is Collector entitled to recover as damages?

10.Wholesaler and Grocery Store enter into a contract under the terms of which Grocery Store agrees to buy a ton of apples from Wholesaler for \$1,000. Wholesaler can get as many apples as it wants for \$900 a ton. Grocery Store breaches its contract with Wholesaler, and Wholesaler in good faith and in a commercially reasonable manner re-sells the apples it had planned to sell to Grocery Store to Kroger for \$975 a ton. How much is Wholesaler entitled to recover in damages?

11.Farmer and Broker enter into a contract under the terms of which Broker agrees to buy Farmer's entire apple crop for \$1,000 a ton. It costs Farmer \$900 a ton to grow the apples. Broker breaches its contract with Farmer, and Farmer in good faith and in a commercially reasonable manner re-sells the apples she had planned to sell to Broker to Health Food Store for \$975 a ton, giving proper notice, of course. How much is Farmer entitled to recover in damages?

Answers to Problems to Review on Your Own

Problem 1: \$8,000

Loss in value is \$100,000. Cost avoided is \$92,000.

If the contract had been performed, Seller would have \$100,000 in cash. Now she has a \$92,000 house. The difference is \$8,000.

591 Problem 2: \$1,500

Loss in value is \$6,500. Cost avoided is \$5,000.

If the contract had been performed, she would have had a boathouse and been out \$5,000. Now she has the boathouse but it will cost her \$6,500. She needs to get \$1,500 to get where she would have been.

Problem 3: \$9,000

Loss in value is \$19,000. Cost avoided is \$10,000. (That is the amount owing on the contract that she would have had to pay if it hadn't been breached).

If the contract had been performed, she would have had a boathouse and been out \$15,000. Now she has the boathouse but is out \$24,000 (\$5,000 to Contractor and \$19,000 to the person who actually built the boathouse).

Problem 4: \$2,000

Loss in value is \$8,000. Cost avoided is \$6,000.

If the contract had been performed, she would have made \$2,000. As it is now, she has nothing.

Problem 5: \$0. We'll discuss in a later chapter whether or not she might have to give something back.

Loss in value is \$9,000. Cost avoided is \$10,000.

If the contract had been performed, she would have made \$2,000. As it is, she has \$3,000.

Problem 6: 40 cents a bushel

Section 2--712 allows the non-breaching buyer to recover the difference between the cost of cover (\$3.40---she can get the higher price because she purchased "without unreasonable delay") and the contract price (\$3.00) together with incidental or consequential damages (there weren't any) but less expenses saved in consequence of the breach (there weren't any).

Problem 7: 25 cents a bushel

Section 2--713 allows the buyer who has not covered to recover the difference between the market price (\$3.25) and the contract price (\$3.00) together with incidental and consequential damages (none) less expenses saved (none).

Problem 8: \$500,000

Section 2--706 allows the non-breaching seller to recover the difference between the resale price (\$1,500,000) and the contract price (\$2,000,000) together with incidental damages (none) less expenses saved (none).

592 Problem 9: \$200,000

If the non-breaching seller does not re-sell, § 2--708(1) gives her as damages the difference between the market price (\$2,000,000) and the unpaid contract price (\$1,800,000) together with incidental damages (none) less expenses saved (none).

Problem 10: \$100 a ton

Because Wholesaler can get as many apples as it can sell, it is a "lost volume seller" and is entitled to the profit it would have made on the contract that was breached.

Problem 11: \$25 a ton

Because Farmer has a limited supply of apples, her damages are determined by § 2--706 which gives her the difference between the resale price and the contract price.

2[\$1,000 in 1932 dollars is roughly the equivalent of \$18,400 in 2019 dollars using the CPI and the GNP Deflator.---Eds.]

3[\$72,000 in 1955 dollars is roughly the equivalent of \$675,000 in 2019 dollars using the CPI and the GNP Deflator.---Eds.] OVERVIEW PROMPT ### 👉 INSTRUCTIONS: 👈

"

_I pasted my Contracts class reading below._

_Create an **rule outline** of each **Restatement (Second) of Contracts** rule and each **UCC** rule presented and applied in my contracts class reading below._

"

----------------------------------------------------

### 📜 CONTRACTS CLASS READING BELOW: 📜

"

577 Chapter 20: Other Measures of Recovery and a Review of Damages

■ ■ ■

A.THE RELIANCE INTEREST