1 george mason school of law contracts ii reliance/restitution/punitives f.h. buckley...
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George Mason School of Law
Contracts II
Reliance/Restitution/Punitives
F.H. Buckley
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
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The measure of damages
When would the Π prefer reliance damages?
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The measure of damages
When would the Π prefer reliance damages? Whenever these exceed the expectation
award
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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?
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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?
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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
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The measure of damages
When should the Π be limited to reliance damages?
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The measure of damages
When should the Π be limited to reliance damages? Contracts with Physicians
Hawkins v. McGee
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The measure of damages
When should the Π be limited to reliance damages? Contracts with Physicians
Hawkins v. McGee
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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?
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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. O’Connor?
What would the two measures give? What difference in pain and suffering claims?
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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. O’Connor?
What would the two measures give? What difference in pain and suffering claims? Is this available in commercial cases?
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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. O’Connor?
What would the two measures give? What would restitution give?
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The measure of damages
Kizas v. Webster
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Robert Stack as Eliot Ness
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 weren’t getting qualified people, and (2) the FBI wanted to institute an affirmative action program.
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The measure of damages
Kizas v. Webster So what do you think of the takings
argument?
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The measure of damages
Kizas v. Webster So what do you think of the takings
argument? Reversed on appeal
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The measure of damages
Kizas v. Webster So what do you think of the takings
argument? If it would succeed, what kind of damages?
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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?
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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 FBI’s right to terminate
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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?
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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? Yes—but no proof that a bad bargain.
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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
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Anglia v. Reed 902
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Robert Reed, The Brady Bunch
Anglia v. Reed
What was the problem with expectation damages?
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Anglia v. Reed
What was the problem with expectation damages?
If expectation damages are speculative, could any reliance damages be awarded?
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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
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Restitution
The forms of action: Trespass Action on the case
Negligence Assumpsit Quasi Contract
Money had and received
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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.
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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?
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Restitution
Bailey v. West p. 5 What should the Πs have done with the
horse?
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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 consent—but not if the Π is an officious intermeddler
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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 consent—but not if the Π is an officious intermeddler If not, see Leebow at p. 911
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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 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
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George Mason School of Law
Contracts II
Reliance/Restitution/Punitives
F.H. Buckley
Zara Contracting
37Tri-cities Airport, Endicott NY
Zara Contracting
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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
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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
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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)?
Zara Contracting
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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)? What was the benefit unjustly retained by
Zara?
Zara Contracting
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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
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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
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Gov. Jesse Ventura (Ind. MN)
Ventura v. Titan
If Ventura had bargained for $X in royalties, could he recover more than this in quantum meruit?
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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?
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Can restitution damages exceed expectation damages?
Britton v. Turner 906 What would expectation damages
amount to?
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Can restitution damages exceed expectation damages?
Britton v. Turner What would expectation damages
amount to? Unlike Zara, Π is in breach here
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Can restitution damages exceed expectation damages?
Britton v. Turner What would quantum meruit give the Π?
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Can restitution damages exceed expectation damages?
Britton v. Turner What would quantum meruit give the Π? Aliter a temptation to strategic behavior
by the employer?
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Can restitution damages exceed expectation damages?
Britton v. Turner What would quantum meruit give the Π? Aliter a temptation to strategic behavior
by the employer? Can the employer bargain around this?
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Can restitution damages exceed expectation damages?
Britton v. Turner What would quantum meruit give the Π? Aliter a temptation to strategic behavior
by the employer? Can the employer bargain around this?
“It is easy, if the parties so choose…”
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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?
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Do damages undercompensate?
If they do, an argument for punitive damages?
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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…
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Do damages undercompensate?
Would compensatory damages undercompensate in Hibschman Pontiac?
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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, (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…
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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? Or elements of fraud, malice etc mingle
in the controversy
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Do damages undercompensate?
The jury awarded punitive damages assessed at 10 times the compensatory damages When is the “first blush” rule triggered?
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Do damages overdeter?
Suppose you’re a potential Δ. Are you made whole by a finding of no liability?
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Do damages overdeter?
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
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Do damages overdeter?
Interstate Exploitation Suppose state A was permitted to
impose a tax on citizens of state B…
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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?
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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?
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Miller Brewing
The court found that Monroe Beverage’s performance was in some ways inferior to Best Beers.
Is this relevant?
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Miller Brewing
Is Hibschman Pontiac overturned? The need for an independent common
law tort.
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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
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