Contract Law: Remedies (Monetary Damages and Equitable Relief) [LEAP Preview]

Summary

This video provides a detailed explanation of expectation and reliance damages in contract law, focusing on how courts calculate these remedies when a contract is breached. Expectation damages are designed to put the plaintiff in the position they would have been in had the contract been performed, and the formula for calculating them includes loss in value, other losses, and cost avoided. If expectation damages are too speculative, reliance damages are used instead, reimbursing the plaintiff for incurred costs. The video emphasizes practical application, offering students insights into test-taking strategies for contract law exams.

Takeaways

• 😀 Expectation damages aim to put the plaintiff in the position they would have been in if the contract had been performed as promised.
• 😀 The formula for expectation damages is: loss in value + other losses - costs avoided - loss avoided.
• 😀 Loss in value is calculated by subtracting what the plaintiff received under the contract from the value they were promised.
• 😀 Incidental costs are general costs typically associated with any breach of contract, such as storage or replacement costs, and are recoverable if reasonable.
• 😀 Consequential costs can only be recovered if they were foreseeable or anticipated by the other party at the time of contracting.
• 😀 If expectation damages are too speculative, reliance damages can be awarded to place the plaintiff in the position they would have been in if the contract had never been formed.
• 😀 Reliance damages focus on reimbursing the plaintiff for their expenses incurred in reliance on the contract, rather than potential profits.
• 😀 Costs avoided refer to savings made by the plaintiff due to not having to perform the contract further, which must be subtracted from damages.
• 😀 Loss avoided involves savings from salvaging or reallocating resources that would have been used to perform the contract, and this must also be subtracted.
• 😀 A breach of contract is typically remedied by monetary damages, with expectation damages being the default remedy unless circumstances dictate otherwise.
• 😀 Working through fact patterns and applying the formula is the best way to master remedies in contract law and ensure accuracy in damages calculations.

Q & A

What is the default remedy available in a breach of contract case?

The default remedy available in a breach of contract case is **monetary damages**, specifically **expectation damages**, which aim to put the plaintiff in the position they would have been in had the contract been fully performed.

What are expectation damages, and how are they calculated?

Expectation damages are calculated by determining the loss in value, plus other losses, minus costs avoided and losses avoided. The formula is: **Loss in value + Other losses - Cost avoided - Loss avoided**.

How do you calculate the loss in value in a contract breach scenario?

The loss in value is the difference between the value the plaintiff should have received under the contract and the value they actually received. For example, if a builder was promised $100,000 but received nothing, the loss in value would be $100,000.

What are incidental and consequential costs in the context of expectation damages?

Incidental costs are general damages associated with any breach of contract, such as storage costs or finding a replacement. Consequential costs are unique to the plaintiff and may be recoverable if they were foreseeable at the time of contracting.

What does 'foreseeability' mean in the context of consequential damages?

Foreseeability refers to whether the other party could have anticipated the plaintiff's unique costs when entering the contract. If the consequential costs were foreseeable, they can be recovered; if they were unforeseeable, they cannot be.

What is the purpose of subtracting costs avoided and losses avoided in the damages calculation?

Costs avoided are subtracted because they represent expenses the plaintiff no longer needs to incur due to the breach. Losses avoided are subtracted if the plaintiff salvaged resources that could have been used to perform the contract.

How do you calculate costs avoided in a breach of contract scenario?

Costs avoided are calculated by subtracting the amount already spent on the contract from the estimated total cost to complete the contract. For instance, if a builder was going to spend $90,000 but has already spent $20,000, the cost avoided is $70,000.

What is the role of the duty to mitigate damages in expectation damages?

The duty to mitigate damages requires the plaintiff to take reasonable steps to reduce their losses. If the plaintiff fails to mitigate their damages, the court will subtract the unmitigated losses from the damages calculation.

What happens if expectation damages are too speculative to calculate?

If expectation damages are too speculative, the court may instead award **reliance damages**, which aim to put the plaintiff in the position they would have been in if the contract had never been formed.

How are reliance damages different from expectation damages?

Reliance damages are calculated to restore the plaintiff to the position they would have been in had the contract never been made, whereas expectation damages aim to place the plaintiff in the position they would have been in if the contract had been fully performed.