Contract Damages Subject Matter (Use to answer scenarios below): 1) Direct or Compensatory Damages: These are damages for a monetary amount that is intended to compensate the non-breaching party for losses that result from the breach. The aim is to "make the injured party whole again". There are two types of compensatory damages: Expectation Damages: These are damages that are intended to cover what the injured party expected to receive from the contract. Calculations are usually straightforward as they are based on the contract itself or market values. Consequential Damages: These are intended to reimburse the injured party for indirect damages other than contractual loss; for example, loss of business profits due to an undelivered machine. In order to recover, the injuries must "flow from the breach," i.e. be a direct result of the breach, and be reasonably foreseeable to both parties when they entered into the contract.

2) Liquidated Damages: Damages that are specifically stated in the contract. These are available when damages may be hard to foresee and must be a fair estimate of what damages might be if there is a breach. Both parties determine what would be an appropriate amount during contract negotiations. 3) NO Punitive Damages: These are damages that are intended to punish the breaching party and to deter him or her from committing any future breaches. They are NOT awarded in contract cases, though they may be available in some fraud or tort cases that overlap with contract law.

The court may award Specific Performance and require parties to perform the contract only in cases involving: the sale of land or some other asset that is unique.

Questions:

1. Sunshine offers to sell Squeeze one thousand bushels of oranges for $5 per bushel to be delivered on April 1st. Squeeze agrees. On March 31st, the price of oranges reaches $9 per bushel and, the next day, Sunshine refuses to deliver the oranges to Squeeze. Squeeze is now the victim of a breach of contract. The court, in order to put Squeeze in the position they would have been in had Sunshine not breached, will award _____________ damages.

2. On March 1st, Ramon Garcia and the Red Sox enter into a contract under which Garcia agrees to play for one season and the team agrees to pay Garcia $500,000. On March 15th, the team informs Garcia that they will not honor the contract. On March 20th, the Dodgers offer Garcia a contract to play for them for one season for $250,000. Garcia decides that he would rather sit on his couch for a season and collect damages from the Red Sox than actually have to play so he turns the offer down. What damages will be awarded to Ramon?

3. On March 1st, Ramon Garcia and the Red Sox enter into a contract under which Garcia agrees to play for one season and the team agrees to pay Garcia $500,000. On March 15th, the team informs Garcia that they will not honor the contract. On March 20th, Garcia is offered a $50,000 contract by the Cozumel Crusaders of the Mexican semi-pro league. Garcia turns the offer down. What might Ramon recover in terms of damages?

Answer rating: 100% (QA)

1 In the scenario where Sunshine breaches the contract by refusing to deliver the oranges to Squeeze ... View the full answer