MANGMT 3540 1st Edition Lecture 16Outline of Last Lecture I. Complete PerformanceII. Material BreachIII. Occurrence or Failure of ConditionIV. Agreement of PartiesV. Discharge by Operation of LawVI. Compliance with Court Ordered RemedyOutline of Current Lecture VII. Types of interests of non-breaching partiesVIII. Six categories of money damagesCurrent LectureI. Types of interests of non-breaching partiesA. Expectation interesti. The non-breaching party gets the benefit of the bargainii. Example: deal to buy car for $10,000, then seller cancels. I buy for $12,000…I can then sue for $2,000.B. Reliance interesti. The non-breaching party receives the cost of partial performance or preparation to performii. Example: cost incurred due to reliance upon purchasing an itemC. Restitution interesti. One party receives the value of the benefit conferred on the other partyii. Example: quasi contract (implied in law)II. Six categories of money damagesA. Compensatory (direct) damagesi. Buyer of goods recovers: cover price minus contract price for seller’s breachThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.ii. Buyer of services recovers: cover price minus contract price for provider’s breachiii. Seller of goods recovers: contract price minus fair market value for buyer’s breachiv. Provider of services recovers: lost profit plus cost of partial performance (or contract price if complete performance)B. Consequential Damagesi. Indirect, foreseeable damagesii. Lost profits are consequential damagesiii. To recover lost profits one must prove:1. They were foreseeable; and2. There is evidence of specific loss based on historical salesiv. Hadley vs. Braxendale: transport company could not foresee mill operator’s lost profitsC. Incidental Damagesi. Cost of finding substitute performance (cost of mitigation)ii. Mitigation of damages- Non-breaching party is usually required to make reasonable efforts to lessen damages from breachiii. Examples1. Mitigation in lease situation; 2) what is reasonableD. Punitive (exemplary) damagesi. Damages awarded to punish the defendant and to deter others from similar conductii. Typically available only for intentional tortsiii. Not available for breach of contract, but are available for fraud which arises in a contract settingE. Nominal damagesi. A small amount of damages given to a party who wins but can show no monetary injuryii. Examples1. Auto accident where no injury2. Trespass action3. Employment discriminationF. Liquidated damagesi. Defined: damages in a fixed amount agreed on by the parties prior to any breachii. Requirements for recovery:1. Damages difficult to estimate2. Reasonable amount- unreasonable “penalties” are not enforceableiii. Penalties as legally defined are unenforceable, but the fact that I call liquidated damages a “late payment penalty” is
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