Problems in Measuring Damages

Groves v John Wunder Co

• 
  The Plaintiff is entitled to receive damages for the cost of it would
  

• 
  The Plaintiff owns a track of land that has a pile of gravel on it
  
• 
  Plaintiff and the defendant enter into a contract of sales with conditions
  
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  The defendant pays plaintiff $105,000 dollars in order to be able to take the gravel with the condition that they leave the property at a level grade when they have taken all the gravel
  
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  The defendant's take all of the good gravel and then breach the contract deliberately
  
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  The cost of completing the work is $60,000
  
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  The value of the land will be $12,000
  
• 
  The plaintiffs are only looking to sell the land, there is not sentimental or personal value here
  
• 
  Plaintiffs sue
  

• 
  Party A pays Party B in full to perform work on property. B quits half way. The work would cost $60,000 to complete but the end product is only worth $12,000
  
• 
  Should damages be awarded on the basis of the economic state the plaintiff would be in had the defendants performed, or on the basis of how much it will cost for them for performance to be completed?
  

• 
  For Plaintiff 
  

• 
  Majority:
  
  • 
    For Plaintiff
    
    • 
      The plaintiff contracted for a certain performance and the defendants willfully breached
      
    • 
      In determining damages for breach of a construction contract the law aims to give the promisee what he was promised
      
      • 
        Within reason… if there is substantial performance the courts will not order a structured torn down and rebuilt. In this case the court awards damages in the amount of the difference of the value of the thing construct and what should have been constructed
        
    • 
      The figure to determine damages by in the breach of a contract to improve land is the hypothetical peak of accomplishment that would have been reached if the work was done
      
    • 
      The owner is entitled to compensation for what he has lost, that is the work or structure he has been promised.
      
      • 
        Diminishing the available award due to the value of the land itself ignores the plaintiff's right to contract.
        
    • 
      If fulfilling the contract does not create economic waste (tearing down something that was built) then the cost of remedying the defect is what should be rewarded.
      
      • 
        Defendants are liable to pay the cost of performance ($60,000)
        
• 
  Dissent:
  
  • 
    For Defendant:
    
    • 
      If damages result in more than compensation the wrong rule is applied (plaintiffs will be making more than the land is worth)
      
    • 
      For the plaintiff's to be awarded the cost of performance it is clear that the land should be for some personal or unique purpose, not for ordinary economic purposes like sale.
      
    • 
      Classic calculation for damages for breach of construction:
      
      • 
        The difference between the market value of the property in the condition it was when delivered to and received by plaintiff and what its market value would have been if defendant had fully complied with its terms.
        

2.B. Lost Volume

The Sales of Goods Act

1. 
   If Buyer to accept and pay for goods Seller can bring action for damages resulting from non-acceptance
   
2. 
   Damages= estimated losses directly and naturally occurring from breach
   
3. 
   If there is a market for the goods then (Contracted Price) - (Market Price) = Damages
   

1. 
   If Seller refuses to sell or deliver goods Buyer can bring action for damages resulting from non-delivery
   
2. 
   Damages = estimated losses directly and naturally occurring from breach
   
3. 
   If there is a market to purchase the goods then (Market Price) - (Contracted Price) = Damages
   

 Thompson (W.L.) Ltd. v Robinson (Gunmakers) Ltd. (1955)

Ratio:

• 
  An available market for goods requires that there be sufficient demand for the goods to readily absorb them
  
• 
  If the application of the available market rule leads to an injustice according to the general principles (person breached has right to be put in place he/she would have been in) then it doesn't need to be applied
  

Facts:

• 
  Defendant contracted to buy a standard model car from plaintiffs
  
• 
  Plaintiffs are car dealer
  
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  Defendant refused to accept delivery
  
• 
  Plaintiffs took car back and returned to supplier
  
• 
  Plaintiff sues for lost profit
  

Issue:

• 
  Is there an available market for cars?
  
• 
  A contracts with B to purchase then refuses to accept delivery. B sues for lost profit. A claims there is available market
  

Decision:

• 
  For Plaintiff.
  

 Reasons:

• 
  Defendant's rely on s.48(3) of Sale of Goods Act
  
• 
  General Rule for breach of contract to supply
  
  • 
    If the plaintiff has proved a breach he/she is entitled to be placed, as far as money can do it, in as good of a situation as if the contract had been performed
    
• 
  Defendant's argue that there is a market for the car and so the damages should be the difference between what they would pay and what the market would (negligible, also might pay for storage and interest)
  
• 
  Judge interpretation of "available market:
  
  • 
    The situation in the area is such that the particular goods could freely be sold, and that there was a demand sufficient to absorb readily all the goods that were thrust on it.
    

 Charter v Sullivan(1957)

Ratio:

• 
  Available market doesn't mean that there is someone to purchase that particular item (car), there must be enough of a market to take all of those type of item (cars). If there isn't enough to take all of those cars the plaintiff’s lost sale will be lost profit.
  

Facts:

• 
  Defendant refuses to accept delivery of car
  
• 
  There is evidence plaintiff could sell all cars of this sort and did resell
  

Issue:

• 
  Does an available market mean that there is one person to purchase that item instead?
  
• 
  A contracts with B to purchase car, A refuses to accept car. B can sell all of his stock anyways.
  

Decision:

For defendant appeal allowed, damages reduced to nominal

Reasons:

• 
  When determining the damages to be rewarded, if any, always start with the profit the plaintiff would have gained if the contract had been performed
  
  • 
    $97.15
    
• 
  Even if there is a market for the car that does not preclude rewarding damages…as the plaintiff could have sold two cars.
  
  • 
    An available market does not just mean one other person that would buy the car
    
• 
  Plaintiff MUST show that he lost those profits
  
• 
  As the demand was so high for this car the plaintiff fails to show that he lost any profit as he would have sold all of those cars anyways
  

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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