THE GOALS OF CONTRACT DAMAGES
Case name| Facts| Issue| Holding| Reasoning|
Expectation| | | | |
Hawkins v. McGee1| P sues D surgeon for breach of warranty of operation success – “I guarantee to make a 100% perfect hand.”| Was there a K and a breach? Were damages appropriate?| There was a K and a breach. Damages measure should have been expectation damages.| Purpose of damages is to put P in as good a position as he would have been in had D kept the K. Difference b/t value to him of a perfect hand and value of hand in present condition, which includes any ill effect (the ill effect is not a separate element of damages; it’s included in expectations measure)| Sullivan v. O’Connor2| Entertainer underwent surgery for better nose; instead got a worse nose.| What’s measure of damages – expectation or reliance?| Reliance measure of damages is correct.| Don’t know how much money she could have been making w/a perfect nose. Credibility of patients re: alleged statements of their doctors.| Diminution in value vs. cost of performance|
Groves v. John Wunder Co.3| P leased land and screening plant to D for 7 yr term; D paid $105,000 and promised to grade (make land of uniform grade after removing gravel and sand); D deliberately breached by removing only best gravel| Which kind of expectation damages is correct – diminution in value or cost of performance?| Cost of performance is correct measure of damages.| Don’t want to reward D’s bad faith (willful breach)Law aims to award P w/what was promisedNo economic waste in remedying defectsClass notes – like buying a lottery ticket when measure is cost of performance; no lottery when measure is diminution in value.Under the Restatement, expectation interest = loss of value resulting from the breach| Peevyhouse v. Garland Coal & Mining Co.4| P family leased ½ of farm to Ds to strip mine; Ds supposed to fill in pits and smooth surface; Ds didn’t leave land looking nice at cost of $29,000 for land value increase of $300| Was $5000 damage award correct?| No – correct measure is diminution in value - $300.| Statute: “no person can recover a greater amount in damages for breach of an obligation than he would have gained by the full performance”Cost of performance would give P family $4700 over value of land. Result of gross disparity b/t two measures of expectation damages. But you’d expect family to value land beyond market value – they have to show this.Dissent – diminution in value damages takes benefit written into K from P and transfers it to D| Advanced, Inc. v. Wilks5| Defectively constructed house. Jury awarded cost of performance, even though higher than diminution of value damages.| Diminution in value v. cost of performance.| Cost of performance.| When likely that P will use award to actually repair, not pocket it and sell home, then okay to award cost of performance damages.| Acme Mills & Elevator Co. v. Johnson5| P to buy wheat from D at $1.03/bushel. No delivery date specified in K. On July 14, wheat was $1.16. On July 27, down to $0.975. P wants anticipated profit of $1.16-1.03 =$0.13/bushel| When should wheat have been delivered? What are damages?| Delivery date, since none specified, is whatever is reasonable. | July 27 was reasonable, when wheat was $0.975. Damages are $0.975-$1.03 <0. Means no damage award.Spot market price at reasonable date of delivery was less than P would have had to pay D. So D doesn’t owe P anything. D would have owed P if spot market price was over $1.03.| Jacob & Youngs v. Kent5| K required Reading pipes in house. D installed non-Reading pipes and refused to replace.| Diminution in value v. cost of performance.| Diminution in value = value of house w/ Reading pipes-value of house w/o Reading pipes = 0| Cost of performance would require tearing down house to replace non-Reading w/Reading pipes. Default rule for...