George Mason School of Law

1. George Mason School of Law Contracts II Reliance/Restitution/Punitives This file may be downloaded only by registered students in my class, and may not be shared by them F.H. Buckley fbuckley@gmu.edu

2. Next day

3. This week • Reliance • Restitution • Punitives • Lost-volume seller

4. The measure of damages • If damages are meant to compensate for a wrong, just what is the wrong? • Failure to perform: Expectation damages • Inviting detrimental reliance: reliance damages

5. The interplay of the measures of damages • When might reliance damages exceed expectation damages? • When might damages be limited to the reliance measure?

6. Could reliance damages exceed the expectation measure? • When would a Π want more than expectation damages?

7. Could reliance damages exceed the expectation measure? • When would a Π want more than expectation damages? • Bad bargains

8. Could reliance damages exceed the expectation measure? • When would a Π want more than expectation damages? • Bad bargains • Restrictions on the expectation measure • Uncertainty • Forseeability

9. The measure of damages • When would the Π prefer reliance damages? • Should the Π have the option in such cases?

10. Freund at 95 • Semble reliance damages not to exceed the expectation interest, or else a windfall

11. When should the Π be limited to reliance damages?

12. When should the Π be limited to reliance damages? • Contracts with Physicians • Hawkins v. McGee at 892

13. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • Was the doctor negligent?

14. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • Was the doctor negligent? • Had he been negligent, what would the damages have been?

15. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • Was the doctor negligent? • Had he been negligent, what would the damages have been? • Return of doctor’s fee • Pain and suffering from the operation • Difference between the before-and-after hand

16. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • Was the doctor negligent? • In short, reliance damages • Return of doctor’s fee • Pain and suffering from the operation • Difference between the before-and-after hand

17. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • What did the court award?

18. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • What did the court award? • The difference between the hand as promised and the hand after the operation less the doctor’s fee

19. When should the Π be limited to reliance damages? • Hawkins v. McGee at 892 • What did the court award? • The difference between the hand as promised and the hand after the operation less the doctor’s fee • I.e., The expectation interest

20. Why a different result in Sullivan v. O’Connor at 890?

21. Why a different result in Sullivan v. O’Connor at 890? • What did the judge instruct the jury?

22. Why a different result in Sullivan v. O’Connor at 890? • What did the judge instruct the jury? • Out of pocket expenses incident to the operation • Damages for the way in which the nose was made worse • Pain and suffering for the third operation • Loss of earnings too uncertain

23. Why a different result in Sullivan v. O’Connor at 890? • What didn’t the Π ask for the difference between the nose as promised and delivered?

24. Why a different result in Sullivan v. O’Connor at 890? • What didn’t the Π ask for the difference between the nose as promised and delivered? • Was this really a case which denied the expectation measure?

25. Why a different result in Sullivan v. O’Connor at 890? • What didn’t the Π ask for the difference between the nose as promised and delivered? • Can one generalize this to all non-commercial cases, as Fuller and Perdue argue at 894?

26. Why a different result in Sullivan v. O’Connor at 890? • What didn’t the Π ask for the difference between the nose as promised and delivered? • Can one generalize this to all non-commercial cases, as Fuller and Perdue argue at 894? • What is the link between Pond v. Harris and Smith v. Sherman in n. 6?

27. Why a different result in Sullivan v. O’Connor at 890? • What didn’t the Π ask for the difference between the nose as promised and delivered? • Could a court award damages for pain and suffering and emotional distress in contract?

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

29. The measure of damages • Kizas v. Webster • The FBI invited college graduates to work as clerical staff because of the possibility of receiving preferential consideration as special agents

30. The measure of damages • Kizas v. Webster • The FBI invited college graduates 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.

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

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

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

34. 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 here?

35. 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 here? • Uncertainty • FBI’s right to terminate

36. 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?

37. 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? • Albert v. Armstrong at 901

38. 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? • Albert v. Armstrong at 901 • What might have given Armstrong the option to sue for reliance damages, and how were they limited?

39. 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 and onus was on the FBI

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

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

42. Reliance damages and uncertainty of the expectation • The expectation interest is sizable but uncertain • The expectation interest is likely trivial but uncertain Cf. Restatement 349, Comment a

43. Reliance damages and uncertainty of the expectation • Wartzman v. Hightower at 901

44. Reliance damages and uncertainty of the expectation • Wartzman v. Hightower at 901 • Why a problem with expectation damages?

45. Reliance damages and uncertainty of the expectation • Anglia v. Reed 902 Robert Reed, The Brady Bunch

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

47. 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

48. Restitution or Unjust Enrichment • A general principle of restitution out of Quasi Contract, Money had and received, breach of fiduciary duty

49. Bailey v. West • When is quasi-contractual liability imposed? • Benefit conferred on defendant by plaintiff • Appreciation by defendant of the benefit • It would be inequitable to permit the defendant to retain the benefit

50. Restitution • Bailey v. West p. 5 • What should the Πs have done with the horse? • No recovery for officious intermeddler