Contracts: Remedies: Monetary: Consequential Damages

• Consequential damages: damages that are (a) special to this particular plaintiff and (b) reasonably foreseeable by the breaching party at the time of the contract. [common law & article 2] – (limited by a foreseeability requirement].

• Miller contracts with UPS to ship a broken mill shaft to a mill shaft maker for $100. UPS does not perform. Miller pays DHL $150 to ship the shaft. What are Miller’s damages? $50 in expectation damages. Miller was supposed to spend $100 and had to pay $150 for services. $150-100 = $50.

• Same facts, except that UPS delays in shipping the shaft. Miller does not have another shaft. As a result, the mill is shut for 9 extra days. Can Miller recover its $2,000 in lost profits? These damages are special to this Miller. Most mill operators will have more than 1 shaft. It all boils down to whether this was reasonably foreseeable by UPS at the time of the contract. If UPS couldn’t reasonably foresee this result, UPS is not liable. UPS is only liable if it was told about them or if it was reasonably foreseeable.

• House hires me to paint his beach house for $3,000. Before I agree, he tells me that he’ll lose $500 in rent if I don’t finish by Friday. I repudiate the contract. House can’t get anyone to paint by Friday & loses the rent. He later pays $3,400 to get the job done. What are House’s damages? House has $400 in expectation damages. This is the extra $ he had to pay to get the house painted. He has also suffered $500 in consequential damages. Rent was special to the house, and foreseeable. $900 in damages.