Ch. 2 Remedies for Breach of Promise

Bollenback v Continental Casualty Company (1965)

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  The purpose of rescission and restitution is to return the parties as near as possible to their positions before the formation of the contract so that they parties can find the desired performance elsewhere
  
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  The purpose of an action for damages is to put the injured party as near as possible to the position where he would have been if the contract had actually been performed
  
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  In a claim of restitution and rescission in a contract for ongoing services, the plaintiff is entitled to recover to the extent that it returns the plaintiff to the moment at which the defendant stopped performing
  

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  Plaintiff is the holder of a health/accident insurance policy purchased from defendant
  
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  Plaintiff gets in an accident.
  
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  Plaintiff files claim but receives no word
  
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  Plaintiff eventually finds out the defendant claims the policy lapsed in 1959
  
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  After attempting find out about the laps the plaintiff brings an action rescinding the contract due to the defendants refusal to acknowledge its validity
  
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  Plaintiff seeks all previous premiums paid under policy ($2,166.50)
  
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  Defendants claimed they had made a mistake and sought to pay the original claim
  
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  They go to court and the defendants argue the plaintiff has received adequate recovery and rescission is extreme
  

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  Can the plaintiff recover all premiums paid under the contract for a rescission even though he was covered for a partial duration
  
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  Plaintiff has an insurance policy, when making a claim he finds the defendant had not intended on fulfilling obligation for several years
  

For the Plaintiff, the plaintiff is entitled to recover premiums paid for the period of time they were no longer covered

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  There is confusion in the law (at this time) regarding what the remedy should be in this case due to a lack of clarity regarding the difference between:
  
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    An action for restitution upon rescission of the contract (remedy for annulment); and,
    
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    An action for damages for its breach (remedy for failure to perform)
    

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  rescission and restitution:
  
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    The purpose of rescission and restitution is to return the parties as near as possible to their positions before the formation of the contract so that they parties can find the desired performance elsewhere
    

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  Action for damages:
  
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    The purpose of an action for damages is to put the injured party as near as possible to the position where he would have been if the contract had actually been performed
    

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  If there is a rescission and restitution should the plaintiff receive all premiums paid back?
  
  • 
    Issue is that rescission and restitution seeks to put the plaintiff back into position prior to the contract, but the defendant may have performed partially having validly held their side of the contract for an amount of time
    

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  The plaintiff's right to rescind does not carry with it the right to recover such premiums to the extent that they represent the cost of carrying insurance protection actually furnished to the plaintiff.
  
  • 
    Unless it is a case of intentional misrepresentation and the defendant had no intention of fulfilling the obligation at all
    

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  Since the defendant's stated that the policy lapsed in 1959 (and it is 1965) the defendant must repay all premiums back for which the client was not covered by the contract due to its supposed lapsing (they had no intention of fulfilling their obligation during this time)
  

Anglia Television Ltd. v Reed (1972)

Ratio:

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  The principle to be applied is that: A Plaintiff can claim damages for wasted expenses incurred prior to the formation of the contract if it can be reasonably held that those expenses were in the contemplation of the parties as likely to be wasted if the contract was broken and the contract was in fact broken by reason of the defendant's breach of contract
  

Facts:

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  Plaintiff is a production company planning to produce a film
  
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  They have gone through many stages of preproduction (hired director, found locations, etc.)
  
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  They contract with the defendant to be the lead in the film
  
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  The defendant is double booked and repudiates the contract
  
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  The plaintiff sues the defendant in damages claiming for the wasted expenditure
  

Issue:

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  Can the plaintiff recover for expenditure wasted prior to the formation of the contract with the defendant as this would put the plaintiff into a better position than he was in at the time of contracting
  

Decision:

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  For plaintiff, plaintiff can recover for expenses contemplated by parties at signing (def. knew that money would go to waste if he breached)
  

Reasons:

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  Denning
  
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  Defendant refers to an English case from 1969 stating "expenses preliminary to the contract ought not to be allowed. The party enters into them for his own benefit at the time" before the contract is established.
  
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  Denning does not agree:
  
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    In this situation the plaintiff can either claim damages for lost profit, or wasted expenses
    
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    The principle to be applied is that: A Plaintiff can claim damages for wasted expenses incurred prior to the formation of the contract if it can be reasonably held that those expenses were in the contemplation of the parties as likely to be wasted if the contract was broken and the contract was in fact broken by reason of the defendant's breach of contract
    
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  Defendant can be reasonably held to know the expenses the plaintiff had incurred
  
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    Plaintiffs were obligated to attempt to mitigate damages and were required to try and find someone of a similar skill level/level of fame as the defendant (ask what is the plaintiff really contracting for) 
    

A.I. Ogus, "Damages for Pre-Contract Expenditure"

Article regarding Denning's judgment in Anglia Television 

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  Reliance interest:
  
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    The amount of money put in because the party is relying on the performance of the other party
    
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  Expectation interest:
  
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    What the party expects to gain from the other party's performance
    

 

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  Should a party be able to choose which interest it elects to recover for (as in previous case Denning sets out that choice)?
  
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    By allowing a party to choose to rely on reliance interest it places the party to where it was prior to the contract… even though it may have been in a worse position after the defendant performed.
    
    • 
      Policy issue that parties might try and get out of a bad deal
      
  • 
    By having to place the party into a better situation then if the contract had been performed there appears to be a punitive aspect for breach
    
  • 
    Principle more consistent with doctrine of compensation:
    
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      A plaintiff should never be put in a better position than if the contract had been performed
      

 

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  Should pre-contract expenditure form part of the reliance interest award?
  
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    The measure of damage does not put the plaintiffs in the position they would have been in if the contract had not been made
    
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      The plaintiff still would have had spent this money… 
      

My Notes:

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  Appears to be principle of reasonableness at odds with compensatory doctrine.
  
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    What OUGHT compensation do
    
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    What should people be reasonably able to recover 
    

Pitcher v Shoebottom (1971)

Ratio:

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  Damages for material breach = the profit/value the plaintiff would have – the cost required to close the deal)
  
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  When no time of closing is specified a reasonable time is implied 
  

Facts:

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  Plaintiff agreed orally to defendant to purchase land
  
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  They then put the agreement in writing and several payments were made by the plaintiff under agreement
  
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  Defendant then, in breach, sold the land to a third party before the deal closed, likely because the value had gone up
  
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  Plaintiff brings action against defendant for specific performance, or for damages against defendant and purchaser
  
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  Specific performance and damages against purchaser dismissed, damages against defendant allowed
  

 Issue:

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  What damages is the plaintiff entitled to recover given the value is vague
  
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  What time does one determine the closing of a contract if it is not specified in a breached contract?
  
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  Parties A enters contract with B for the purchase of Land. A begins to pay for land, but then B sells to a 3rd party.
  

 Decision:

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  For plaintiff, plaintiff can recover damages for the value of the property at the closing of contract
  

 Reasons:

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  There is not enough evidence to determine the damages suffered by the plaintiff for the defendant's breach
  
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    The land had increased in value since the contract was formed
    
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    The court must find out the value of the contract at the date the contract was supposed to be considered closed
    
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    Damages are being awarded to put the plaintiff in the same position he would have been in at the time when the contract was breached by the vendor.
    
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      Thus, items of expenditure necessary to close the deal must be taken into consideration
      
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    In determining the date of close when a date isn't specified a reasonable date is implied
    

 Hawkins v McGee

Ratio:
Facts:

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  Hairy hand case
  
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  Plaintiff brings a claim for damages for the breach of a warranty regarding the success of an operation
  
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  The defendant performed surgery on the plaintiff, grafting skin from his chest to his hand
  
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  The defendant stated "I will guarantee to make the hand a hundred per cent perfect hand"
  
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  The defendant had also solicited the father of the plaintiff so that he might be allowed to perform the surgery
  

Issue:

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  If a party breaches a warranty how are damages to be rewarded?
  
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  Party A contracts with B for the purchase of a thing. B gives A a warranty regarding the thing. The warranty is breached
  

Decision:

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  For plaintiff, the guarantee was in order to induce the plaintiff to allow the defendant to perform the surgery. The inducement is a warranty which was breached.
  

Reasons:

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  Plaintiff argues the defendant guaranteed a perfect hand (wants damages for breach of warranty)
  
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  The defendant argues no reasonable person would consider that a contractually binding statement
  
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    Given the uncertain nature of surgery
    
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  There is evidence the plaintiff solicited the father of the plaintiff to allow him to perform the surgery
  
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    This is when the guarantee is made
    
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      Defendant wanted a chance to experiment with skin grafting
      
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  This being the case the guarantee is taken to be warranty made to induce
  
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  The measure of damages for a breach of warranty is:
  
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    The value of the thing, if it had corresponded with the warranty and its actual value, together with such incidental losses as the parties knew, or ought to have known, would probably result from a failure to comply with its terms.
    

Directory: outlines
outlines -> Chabot College Fall 2010 Course Outline for Computer Application Systems 60 business software applications/general accounting
outlines -> Adil Khan Contracts Midterm outline- waldron
outlines -> Remedies for breach of promise (1) The Interests Protected
outlines -> Basic Process for Assessing Damages: 97 Select  interest that deserves vindication 97 a. Restitution 97
outlines -> Chapter Five: Written Documents 1 Unsigned Documents 1
outlines -> College of Science and Health
outlines -> Evidence outline
outlines -> 2. Act, Omission, Status or Circumstances 4 Consequences and Causation 8 Introduction to Mens Rea and Intent 10 Levels of Fault 11
outlines -> Course Outline as/huma 2650 0A

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