George Mason School of Law

Contracts II

Reliance/Restitution/Punitives

F.H. Buckleyfbuckley@gmu.edu

The measure of damages

If damages are meant to compensate the innocent party for the wrong done him, what is the wrong when the other party breaches? Failure to perform: Expectation damages Inviting detrimental reliance: reliance

damages

When would the Π prefer reliance damages?

When would the Π prefer reliance damages? Whenever these exceed the expectation

award Limits on expectation damages

Uncertainty Foreseeability Or bad bargains?

award Should the Π have the option in such cases?

Freund

What are the three kinds of damages that are considered? The Expectation Interest The Reliance Interest

Semble not to exceed the expectation interest, or else a windfall

When should the Π be limited to reliance damages?

When should the Π be limited to reliance damages? Contracts with Physicians

Hawkins v. McGee

The measure of damages When should the Π be limited to

reliance damages? Contracts with Physicians

Why a different result in Sullivan v. O’Connor?

Hawkins v. McGee Why a different result in Sullivan v. O’Connor?

What would the two measures give? What difference in pain and suffering claims?

What would the two measures give? What difference in pain and suffering claims? Is this available in commercial cases?

What would the two measures give? What would restitution give?

Kizas v. Webster

15Robert Stack as Eliot Ness

Kizas v. Webster The FBI attracted college graduate to work

as clerical staff because of the possibility of receiving preferential consideration as special agents

The FBI stopped the program in 1977 because (1) they weren’t getting qualified people, and (2) the FBI wanted to institute an affirmative action program.

Kizas v. Webster So what do you think of the takings

argument?

argument? Reversed on appeal

argument? If it would succeed, what kind of damages?

What are the problems with expectation damages?

What are the problems with expectation damages? Uncertainty FBI’s right to terminate

Do expectation damages place a ceiling on reliance damages?

Do expectation damages place a ceiling on reliance damages? Yes—but no proof that a bad bargain.

Do expectation damages place a ceiling on reliance damages? So what they get is the difference between

what they received as FBI employees (and for a year afterwards) and what they would have received in the labor market, plus dislocation

Anglia v. Reed 902

25Robert Reed, The Brady Bunch

Anglia v. Reed

What was the problem with expectation damages?

Anglia v. Reed

If expectation damages are speculative, could any reliance damages be awarded?

Anglia v. Reed

If expectation damages are speculative, could any reliance damages be awarded? Both pre- and post-contract reliance

damages awarded

Restitution

The forms of action: Trespass Action on the case

Negligence Assumpsit Quasi Contract

Money had and received

Restitution or Unjust Enrichment

A general principle of restitution out of Quasi Contract, Money had and received, breach of fiduciary duty

Based on Δ’s unjust retention of a benefit as against Π, and not on Π’s reliance losses.

Restitution

Suppose that, without asking you permission, I put orange aluminum siding on your house. Can I recover the cost of doing do from you?

Restitution

Bailey v. West p. 5 What should the Πs have done with the

horse?

Restitution

horse? Restitutionary remedies are available in

spite or the absence of consent—but not if the Π is an officious intermeddler

Restitution

spite or the absence of consent—but not if the Π is an officious intermeddler If not, see Leebow at p. 911

Restitution

spite or the absence of consent—but not if the Π is an officious intermeddler

But that problem doesn’t arise when restitution is sought as a remedy in contract

Contracts II

Reliance/Restitution/Punitives

Zara Contracting

37Tri-cities Airport, Endicott NY

Zara Contracting

Zara contracts with US gov’t to build an airport

Zara subcontracts the entire job to Π Two months after Π begins work, Zara

wrongfully fires it and finishes the job itself.

Zara Contracting

Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. What can Π recover?

Value of work done at contract rate?

Zara Contracting

Value of work done at contract rate? Quantum meruit for value of work done

(more than contract rate as the work was harder than expected)?

Zara Contracting

Value of work done at contract rate? Quantum meruit for value of work done

(more than contract rate as the work was harder than expected)? What was the benefit unjustly retained by

Zara Contracting

Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. Quantum meruit for value of work done

(more than contract rate as the work was harder than expected)? Contrast Palmer Construction at 909

Qu. Breachers vs. non-breachers

Zara Contracting

Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. Quantum meruit for value of work done

(more than contract rate as the work was harder than expected)? Contrast Palmer Construction at 909

Qu. Breachers vs. non-breachers Britton v. Turner?

Ventura v. Titan 910

44Gov. Jesse Ventura (Ind. MN)

Ventura v. Titan

If Ventura had bargained for $X in royalties, could he recover more than this in quantum meruit?

Ventura v. Titan

If Ventura had bargained for $X in royalties, could he recover more than this in quantum meruit?

Is this consistent with Zara?

Can restitution damages exceed expectation damages?

Britton v. Turner 906 What would expectation damages

amount to?

Britton v. Turner What would expectation damages

amount to? Unlike Zara, Π is in breach here

Britton v. Turner What would quantum meruit give the Π?

Britton v. Turner What would quantum meruit give the Π? Aliter a temptation to strategic behavior

by the employer?

by the employer? Can the employer bargain around this?

“It is easy, if the parties so choose…”

Do damages undercompensate?

The American rule of costs chills meritorious actions (and encourages frivolous ones)

Small dollar claims might not be brought

But class actions remedy this And then some?

If they do, an argument for punitive damages?

Of course, this assumes that the U.S. has it right and the rest of the world is really very backward…

Would compensatory damages undercompensate in Hibschman Pontiac?

Little GTOLittle GTO, you're really lookin' fine

Three deuces and a four-speed and a 389Listen to her tachin' up now, listen to her whineC'mon and turn it on, wind it up, blow it out GTO

Wa-wa, wa, wa, wa, wa, wa, (mixed with "Yeah, yeah, little GTO")

Wa-wa wa, wa, wa, wa, wa, wa (mixed with "Ahhh, little GTO")

Do damagesundercompensate?

What was the “malice, fraud, gross negligence and oppressive conduct”? As opposed to a simple breach of

contract…

What was the “malice, fraud, gross negligence and oppressive conduct”? As opposed to a simple breach of

contract… Did the Π independently establish a

common law tort? Or elements of fraud, malice etc mingle

in the controversy

The jury awarded punitive damages assessed at 10 times the compensatory damages When is the “first blush” rule triggered?

Do damages overdeter?

Suppose you’re a potential Δ. Are you made whole by a finding of no liability?

Suppose you’re a potential Δ. Are you made whole by a finding of no liability? Imagine the argument to the jury in

Miller Brewing They’re so rich, they won’t notice unless

you make it hurt

Interstate Exploitation Suppose state A was permitted to

impose a tax on citizens of state B…

The Pinto Case 922

Ford did not make a safety improvement which would have solved the problem because it did not think this cost effective, given the expected value of the accident In doing so, it valued a life as worth $2M Does this deserve punitive damages?

Miller Brewing

Best Beers a distributor for Miller for 30 years

Was the termination wrongful? Was Miller animated by something other

than its business interests?

Miller Brewing

The court found that Monroe Beverage’s performance was in some ways inferior to Best Beers.

Is this relevant?

Miller Brewing

Is Hibschman Pontiac overturned? The need for an independent common

law tort.

The Backlash

Kozinski in Oki America at 992 Thyssen v. Taiwan Int’l at 923 State Farm and interstate exploitation

at 925

Cooter on business judgment standards

Contracts II

Punitive Damages

George Mason School of Law

Documents

Adam Mossoff, George Mason University School of Law€¦ · Adam Mossoff, George Mason University School of Law . George Mason University Law and Economics Research Paper Series

Thomas W. Hazlett, George Mason University School … Mason University School of Law . ... Brent Skorup, George Mason University, Mercatus Center . George Mason University Law and

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