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1 George Mason School of Law Contracts II Reliance/Restitution/Punitives F.H. Buckley

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Presentation on theme: "1 George Mason School of Law Contracts II Reliance/Restitution/Punitives F.H. Buckley"— Presentation transcript:

1 1 George Mason School of Law Contracts II Reliance/Restitution/Punitives F.H. Buckley

2 Next (last) day Finish Remedies chapter Scott

3 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 3

4 The measure of damages When would the Π prefer reliance damages? 4

5 The measure of damages When would the Π prefer reliance damages? Whenever these exceed the expectation award 5

6 The measure of damages When would the Π prefer reliance damages? Whenever these exceed the expectation award Limits on expectation damages Uncertainty Foreseeability Or bad bargains? 6

7 The measure of damages When would the Π prefer reliance damages? Whenever these exceed the expectation award Should the Π have the option in such cases? 7

8 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 8

9 The measure of damages When should the Π be limited to reliance damages? 9

10 The measure of damages When should the Π be limited to reliance damages? Contracts with Physicians Hawkins v. McGee

11 The measure of damages When should the Π be limited to reliance damages? Contracts with Physicians Hawkins v. McGee 11

12 The measure of damages When should the Π be limited to reliance damages? Contracts with Physicians Why a different result in Sullivan v. OConnor? 12

13 The measure of damages When should the Π be limited to reliance damages? Contracts with Physicians Hawkins v. McGee Why a different result in Sullivan v. OConnor? What would the two measures give? What difference in pain and suffering claims? 13

14 The measure of damages When should the Π be limited to reliance damages? Contracts with Physicians Hawkins v. McGee Why a different result in Sullivan v. OConnor? What would the two measures give? What would restitution give? 14

15 The measure of damages Kizas v. Webster Robert Stack as Eliot Ness

16 The measure of damages 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 werent getting qualified people, and (2) the FBI wanted to institute an affirmative action program. 16

17 The measure of damages Kizas v. Webster So what do you think of the takings argument? 17

18 The measure of damages Kizas v. Webster So what do you think of the takings argument? Reversed on appeal 18

19 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? 19

20 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? What are the problems with expectation damages? 20

21 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? What are the problems with expectation damages? Uncertainty FBIs right to terminate 21

22 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? Do expectation damages place a ceiling on reliance damages? 22

23 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? Do expectation damages place a ceiling on reliance damages? Yesbut no proof that a bad bargain. 23

24 The measure of damages Kizas v. Webster So what do you think of the takings argument? If it would succeed, what kind of damages? 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 24

25 Anglia v. Reed Robert Reed, The Brady Bunch

26 Anglia v. Reed What was the problem with expectation damages? 26

27 Anglia v. Reed What was the problem with expectation damages? If expectation damages are speculative, could any reliance damages be awarded? 27

28 Anglia v. Reed What was the problem with expectation damages? If expectation damages are speculative, could any reliance damages be awarded? Both pre- and post-contract reliance damages awarded 28

29 Restitution The forms of action: Trespass Action on the case Negligence Assumpsit Quasi Contract Money had and received 29

30 Restitution or Unjust Enrichment A general principle of restitution out of Quasi Contract, Money had and received, breach of fiduciary duty Based on Δs unjust retention of a benefit as against Π, and not on Πs reliance losses. 30

31 Restitution: General Principles Suppose that, without asking you permission, I put orange aluminum siding on your house. Can I recover the cost of doing do from you? 31

32 Restitution Bailey v. West p. 5 What should the Πs have done with the horse? 32

33 Restitution Bailey v. West p. 5 What should the Πs have done with the horse? Restitutionary remedies are available in spite of or in the absence of consent but not if the Π is an officious intermeddler 33

34 Restitution Bailey v. West p. 5 What should the Πs have done with the horse? Restitutionary remedies are available in spite or the absence of consentbut not if the Π is an officious intermeddler If not, see Leebow at p

35 Restitution Bailey v. West p. 5 What should the Πs have done with the horse? Restitutionary remedies are available in spite or the absence of consentbut not if the Π is an officious intermeddler But that problem doesnt arise when restitution is sought as a remedy in contract 35

36 Zara Contracting Tri-cities Airport, Endicott NY

37 Zara Contracting 37 Zara contracts with US govt 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.

38 Zara Contracting 38 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?

39 Zara Contracting 39 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? Quantum meruit for value of work done (more than contract rate as the work was harder than expected)?

40 Zara Contracting 40 Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. What can Π recover? What was the benefit unjustly retained by Zara? Is it unjust if the plaintiff is simply paid at the contract rate?

41 Zara Contracting 41 Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. What can Π recover? Does it matter that the defendant was in breach? Cf Restatement 373 Palmer Construction 909

42 Zara Contracting 42 Two months after Π begins work, Zara wrongfully fires it and finishes the job itself. What can Π recover? Does it matter that the defendant was in breach? Cf gloss added by Farash at 910

43 Zara Contracting 43 The measure of recovery: Extent to which defendants wealth is increased? Amount defendant would have paid a third party for the work? Zaras recovery from the government of $17,115 for the extra work?

44 Zara Contracting 44 The court thought that Restatement 347, comment c was triggered. Was it?

45 Briton v. Turner Is there some reason why the no- breach rule should be waived here?

46 Can restitution damages exceed expectation damages? Britton v. Turner Aliter a temptation to strategic behavior by the employer? 46

47 Can restitution damages exceed expectation damages? Britton v. Turner Can the employer bargain around this? 47

48 Do damages undercompensate? The American rule of costs chills meritorious actions (and encourages frivolous ones) Small dollar claims might not be brought 48

49 Do damages undercompensate? The American rule of costs chills meritorious actions (and encourages frivolous ones) But class actions remedy this And then some? 49

50 Do damages undercompensate? If they do, an argument for punitive damages? 50

51 Do damages undercompensate? 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… 51

52 Do damages undercompensate? Would compensatory damages undercompensate in Hibschman Pontiac? 52

53 53 Little GTO, you're really lookin' fine Three deuces and a four-speed and a 389 Listen to her tachin' up now, listen to her whine C'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, (mixed with "Yeah, yeah, little GTO") Wa-wa wa, wa, wa, wa, wa, wa (mixed with "Ahhh, little GTO")

54 Do damages undercompensate? What was the malice, fraud, gross negligence and oppressive conduct? As opposed to a simple breach of contract… 54

55 Do damages undercompensate? 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? 55

56 Do damages undercompensate? The jury awarded punitive damages assessed at 10 times the compensatory damages When is the first blush rule triggered? 5 times is appropriate? 56

57 BMW v. Gore $4,000 in compensatory damages for selling a used car without disclosing it had been repainted $4,000,000 in punitives, later reduced to $2,000,000 by the Alabama Supreme Court After USSC weighs in, punitives reduced to $50,000 57

58 Do damages overdeter? Suppose youre a potential Δ. Are you made whole by a finding of no liability? 58

59 Do damages overdeter? Suppose youre a potential Δ. Are you made whole by a finding of no liability? 59

60 Miller Brewing What was the wrongful behavior? And what were the damages? 60

61 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? 61

62 Miller Brewing The court found that Monroe Beverges performance was in some ways inferior to Best Beers. Is this relevant? 62

63 Miller Brewing Is Hibschman Pontiac overturned? The need for an independent common law tort. 63

64 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? 64

65 The Backlash Kozinski in Oki America at 992 Thyssen v. Taiwan Intl at 923 State Farm and interstate exploitation at 925 Cooter on business judgment standards 65


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