Contracts Outline
Contracts II Outline
Fall 2005
Professor Jean Powers
Cited to Crandall & Whaley’s Contracts, 4th Edition
I) Damages (227)
A) Introduction (227)
1) General Rule – Contract damages should put the π in as good of a position as if the contract was fulfilled.
2) No action on a contract need be present for damages to be proper. An executory contract will suffice.
B) Measuring Expectation Damages (229)
1) Expectation = Expected Value + Costs – Expenses Mitigated
2) Repair Theory – Damages should put things in the state that they were specified in the contract (IE fix the land as per the contract)
(a) Argument against repair theory is that given a large quantity of money to repair land, the π will simply keep the money, ensuring a dramatic windfall.
3) Diminution in Value Theory – Damages should pay the difference between value delivered and value as promised (IE pay the devaluation of the land because it wasn’t fixed after strip mining)
(a) Diminution is compared to what the property would be worth if proper, not compared to any appreciated value.
4) Generally, courts favor repair theory damages, unless economic waste will occur through granting of repair damages (IE economic waste occurs if a home constructor is forced to tear down a house and rebuild it in order to use the correct type of water pipes).
(a) Economic waste is found if the repairs cost as much or more than the property is worth.
5) Rule: You have the right to do what you want with your property.
(a) IE if you want to devalue your land (by putting neon green siding on your house) and you find that the contractor put grey siding on against your wishes, there has been an actual upturn in the value of your land (as compared to the green siding), but the damages will be for repair, not devaluation.
6) In general, the repair theory is appropriate cases of aesthetics, safety, or usability.
(a) Aesthetics comes from the right to do as you will with your property and the other come from the
Fall 2005
Professor Jean Powers
Cited to Crandall & Whaley’s Contracts, 4th Edition
I) Damages (227)
A) Introduction (227)
1) General Rule – Contract damages should put the π in as good of a position as if the contract was fulfilled.
2) No action on a contract need be present for damages to be proper. An executory contract will suffice.
B) Measuring Expectation Damages (229)
1) Expectation = Expected Value + Costs – Expenses Mitigated
2) Repair Theory – Damages should put things in the state that they were specified in the contract (IE fix the land as per the contract)
(a) Argument against repair theory is that given a large quantity of money to repair land, the π will simply keep the money, ensuring a dramatic windfall.
3) Diminution in Value Theory – Damages should pay the difference between value delivered and value as promised (IE pay the devaluation of the land because it wasn’t fixed after strip mining)
(a) Diminution is compared to what the property would be worth if proper, not compared to any appreciated value.
4) Generally, courts favor repair theory damages, unless economic waste will occur through granting of repair damages (IE economic waste occurs if a home constructor is forced to tear down a house and rebuild it in order to use the correct type of water pipes).
(a) Economic waste is found if the repairs cost as much or more than the property is worth.
5) Rule: You have the right to do what you want with your property.
(a) IE if you want to devalue your land (by putting neon green siding on your house) and you find that the contractor put grey siding on against your wishes, there has been an actual upturn in the value of your land (as compared to the green siding), but the damages will be for repair, not devaluation.
6) In general, the repair theory is appropriate cases of aesthetics, safety, or usability.
(a) Aesthetics comes from the right to do as you will with your property and the other come from the