certainty of damages l.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
Certainty of Damages PowerPoint Presentation
Download Presentation
Certainty of Damages

Loading in 2 Seconds...

play fullscreen
1 / 51

Certainty of Damages - PowerPoint PPT Presentation


  • 171 Views
  • Uploaded on

Certainty of Damages. Contracts – Prof. Merges April 14, 2011. Fera. Facts Procedural History. Fera. What was “the deal” Look at lease terms. Fera. What was “the deal” Look at lease terms $1000 min. plus % of receipts over $240,000  Why structured this way?. Fera.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'Certainty of Damages' - darren


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
certainty of damages

Certainty of Damages

Contracts – Prof. Merges

April 14, 2011

slide4
Fera
  • Facts
  • Procedural History
slide5
Fera
  • What was “the deal”
  • Look at lease terms
slide6
Fera
  • What was “the deal”
  • Look at lease terms
  • $1000 min. plus % of receipts over $240,000

 Why structured this way?

slide7
Fera
  • Modification – top p. 674
  • Consideration required? Present here?
view from precedent
View from Precedent
  • Sedgwick, Jarrait case – what is their view in the availability of lost profits in a breached lease case?
  • What damages do they say are appropriate?
is there a prospective profits rule10
Is there a “prospective profits” rule?
  • Not really: application of a more general principle: the “certainty principle”
is there a new business rule12
Is there a “new business” rule?
  • No; more like a “rule of thumb”
  • Again, certainty is the problem with proving lost profits from a “new business”
why did supreme ct reinstate jury verdict here14
Why did Supreme Ct. reinstate jury verdict here?
  • Extensive testimony, by experts in liquor and book businesses
  • Reasonable damage figure from jury -- $200,000, inside range of $275,000 to $0
  • P. 676
dissent approach result
Dissent – approach & result
  • “Remittur” device
  • Rationale?
352 uncertainty as a limitation on damages
§ 352. Uncertainty As A Limitation On Damages

Damages are not recoverable for loss beyond an amount that the evidence permits to be established with reasonable certainty.

hall v earthlink 396 f3d 500 2d cir 2005
Hall v. Earthlink, 396 F3d 500 (2d Cir 2005)

Independent-film producer, who had planned to use e-mail account to promote his newest film, sued Internet-service provider (ISP) after ISP incorrectly included him on its list of e-mail abusers and cancelled his e-mail account. Summary dismissal of consequential-damages claim was appropriate where producer did not present any reasonably reliable evidence of anticipated profits or any objective evidence of damages to producer's career and business opportunities due to film's failure.

rsb laboratory services inc v bsi corp 847 a 2d 599 611 nj super 2004
RSB Laboratory Services, Inc. v. BSI, Corp., 847 A.2d 599, 611 (NJ Super 2004)

Medical laboratory sued equipment supplier for breach of contract, breach of warranty, and consumer fraud after supplier provided faulty equipment that prevented laboratory from operating. Trial court entered judgment on a jury verdict awarding plaintiff damages, including lost profits. Affirmed: questioning “new business rule,” and holding it inapplicable here.

drive ins ny state
Drive-ins, NY State
  • 147 – 1958
  • 33 - 2009
evergreen amusement
Evergreen Amusement
  • “no case has permitted recovery of lost profits under comparable circumstances”
liquidated damages
Liquidated Damages
  • Why “liquidated”?
lease terms
Lease terms
  • $458.33 rental per mo.; store expanded from 3200 to 5600 sq. feet
  • Signed May 21, 1971
  • 33 year term
  • Cancellation term
lease terms30
Lease terms
  • $458.33 rental per mo.; store expanded from 3200 to 5600 sq. feet
  • Signed May 21, 1971
  • 33 year term
  • Cancellation term

 Why was this important to the Township?

cancellation clause
Cancellation clause
  • Who had right to terminate? On what conditions?
  • P. 681
cancellation clause32
Cancellation clause
  • Who had right to terminate? On what conditions?
  • Hard to say, seems open-ended
cancellation clause damages
Cancellation clause: damages
  • Pro rata improvement costs
  • How lessees are compensated for improvements they pay for
  • 2nd part: 25% of average gross receipts for 3 years prior to termination
why is this problematic35
Why is this problematic?
  • $290,310 – excessive on its face?
  • Compared to what?
why is this problematic36
Why is this problematic?
  • $290,310 – excessive on its face?
  • Compared to what?
  • Sublessee’s income prior three years?
why might court suspect the clause was a deterrent rather than an estimate
Why might court suspect the clause was a “deterrent” rather than an “estimate”?
  • Wasserman clearing $1400 per month in lease; paying out only $450
  • No other takers for property; did Wasserman’s have (too) powerful bargaining position?
factors on remand
Factors on remand
  • Reasonableness of gross receipts
  • Reasoning of parties in arriving at 25% figure
  • Etc. – p. 686
liquidated damages pro and con
Liquidated damages: pro and con
  • Pro: freedom of K, parties in best position to negotiate
  • Con: In terrorem effect; “remedies are for the court” (?)
356 liquidated damages and penalties
§ 356. Liquidated Damages And Penalties

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual loss caused by the breach and the difficulties of proof of loss. A term fixing unreasonably large liquidated damages is unenforceable on grounds of public policy as a penalty.

2 718 liquidation or limitation of damages deposits
§ 2-718. Liquidation Or Limitation Of Damages; Deposits

(1) Damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual harm caused by the breach and, in a consumer contract, the difficulties of proof of loss, and the inconvenience or nonfeasibility of otherwise obtaining an adequate remedy.

what are the key elements
What are the key elements?
  • Reasonable estimate of loss due to breach; not penal “on its face”
  • Restatement: “reasonable” in light of EITHER (1) facts at time K executed; OR (2) facts as they actually occurred
gustafson
Gustafson
  • $530,000 due for work
  • State withholds $14,070 for 67 days’ late performance
  • K term: 500 k - $ 1mil, damages of $210 per day for each day of delay
court s analysis
Court’s analysis
  • Rough calibration of damages to lost value of public works
  • State in best position to estimate these losses?
law and economics opposition to liquidated damages doctrine
Law and economics opposition to liquidated damages doctrine
  • Historical overhang
  • Freedom of K
  • Comparative law aspects
cal civil code 1671
Cal. Civil Code §1671

(b) Except as provided in subdivision (c), a provision in a contract liquidating the damages for the breach of the contract is valid unless the party seeking to invalidate the provision establishes that the provision was unreasonable under the circumstances existing at the time the contract was made.

(c) [Presumed void in consumer K or lease]