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George Mason School of Law

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

  2. 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. The measure of damages • When would the Π prefer reliance damages?

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

  5. 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. 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. 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. The measure of damages • When should the Π be limited to reliance damages?

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

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

  12. 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?

  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. O’Connor? • What would the two measures give? • What difference in pain and suffering claims? • Is this available in commercial cases?

  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. O’Connor? • What would the two measures give? • What would restitution give?

  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 weren’t getting qualified people, and (2) the FBI wanted to institute an affirmative action program.

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

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

  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?

  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?

  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 • FBI’s right to terminate

  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?

  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? • Yes—but no proof that a bad bargain.

  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

  25. Anglia v. Reed 902 Robert Reed, The Brady Bunch

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

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

  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

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

  30. 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.

  31. 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?

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

  33. 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

  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 consent—but not if the Π is an officious intermeddler • If not, see Leebow at p. 911

  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 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

  36. George Mason School of Law Contracts II Reliance/Restitution/Punitives F.H. Buckley fbuckley@gmu.edu 36

  37. Zara Contracting Tri-cities Airport, Endicott NY

  38. 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.

  39. 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?

  40. 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? • Quantum meruitfor value of work done (more than contract rate as the work was harder than expected)?

  41. 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? • 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?

  42. 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

  43. 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?

  44. Ventura v. Titan 910 Gov. Jesse Ventura (Ind. MN)

  45. Ventura v. Titan • If Ventura had bargained for $X in royalties, could he recover more than this in quantum meruit?

  46. 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?

  47. Can restitution damages exceed expectation damages? • Britton v. Turner 906 • What would expectation damages amount to?

  48. Can restitution damages exceed expectation damages? • Britton v. Turner • What would expectation damages amount to? • Unlike Zara, Π is in breach here

  49. Can restitution damages exceed expectation damages? • Britton v. Turner • What would quantum meruit give the Π?

  50. 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?