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

fbuckley@gmu.edu

Next (last) day

Finish Remedies chapter Scott 1001-36

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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 892

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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 would restitution give?

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The measure of damages

Kizas v. Webster 896

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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: 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?

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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 of or in 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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Zara Contracting 903

36Tri-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?

What was the benefit unjustly retained by Zara? Is it unjust if the plaintiff is simply paid at the

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?

Does it matter that the defendant was in breach? Cf Restatement 373 Palmer Construction 909

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?

Does it matter that the defendant was in breach? Cf gloss added by Farash at 910

Zara Contracting

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The measure of recovery: Extent to which defendant’s wealth is

increased? Amount defendant would have paid a

third party for the work? Zara’s recovery from the government of

$17,115 for the extra work?

Zara Contracting

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

Briton v. Turner 906

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Is there some reason why the no-breach rule should be waived here?

Can restitution damages exceed expectation damages?

Britton v. Turner Aliter a temptation to strategic behavior

by the employer?

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Can restitution damages exceed expectation damages?

Britton v. Turner Can the employer bargain around this?

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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

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Do damages undercompensate?

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

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 GTO, you're really lookin' fineThree 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?

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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?

5 times is appropriate?

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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

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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?

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Miller Brewing

What was the wrongful behavior? And what were the 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 Beverges 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 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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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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