- Avoidability: cannot recover damages that were avoidable
- Foreseeability: cannot recover unforeseeable damages
- Certainty: must prove to reasonable certainty
Rockingham County v. Luten Bridge Co. (35 F.2d 301, 1929)
- Contractor completed bridge even though county breached by telling them to stop work
- Trial court awarded damages
- Appeals court says can’t pile up damages ("American rule")—π can’t hold ∆ liable for damages that could have been avoided)
- Older idea was that, to prove breach, must be willing and able to perform/tender performance, THEN there is a breach
- This really doesn’t make sense in an employment contract context
- Now not the law
- Also wasteful/useless to perform in this case
- Damages?
- π asked for full cost
- Appeals court says can't recover full amount b/c could have avoided most of later costs
- Can receive expected profit/expenses incurred up to time of breach, but cannot recover full cost including costs incurred later that could have been avoided
- Expectancy: costs incurred + profit expected – cost incurred AFTER rescission/breach that could have been avoided
- See R.2d §350 (p. 243): must mitigate damages ("duty to mitigate")
- but note that this isn't really a duty, more like an incentive than a penalty
- you are still entitled to same damage amount regardless
- BUT see UCC 2-704(2), manufacturers encouraged to finish building goods so that it can be resold—invites Seller to make a judgment (good-faith judgment)
- Impossible to reconcile with Naval—each has own logic
- Tongish is a farmer with a contract of sale with a co-op
- Really a suit by the co-ops against Tongish
- He sold to someone else to make more money
- CO-OP: Co-op didn’t cover, so look at market price (market differential)
- TONGISH: But were going to resell, so should only get their profit (the 55 cents/hundred for handling fee)
- Court gives market diff (larger number)
- Doesn’t want to encourage efficient breach in this case
- Law doesn’t like windfalls, courts especially don’t want windfall to go to breaching party
- Ignores problem of undermining security people take in counting on contracts
- Court agreed replacement offer was inferior to original offer
- But dissent says replacement offer close enough
- Final question: did employee act reasonably?
- In some sense unfair windfall to breaching party, but overall social goal of "discouraging idleness" more important
- But don't have to take work different in kind or that is "inferior"
- Replaced "Reading" brand with a different brand, but otherwise identical
- Typically damages are replacement/fix cost
- Alternative measure of damages, very forgiving to builder
- "Diminished value rule"
- Only if innocent and minor
