Contracts: Cases, Discussion, and Problems essay
The Amours were planning to celebrate their 50th wedding anniversary and contracted Jacque LeChef, a well-known chef. The value of catering estimated by this chef was $20,000, and the Amours paid a deposit of $3,500 (15%). They also invested $2,000 into printing wedding invitations with LeChef’s name there. However, LeChef breached the contract with the Amours in favor of a celebrity wedding. So the Amours contracted Paulette Gourmande, another famous chef. She charged $26,000. The Amours also had to reprint the invitations for another $2,000. The key question is the amount of remedies to the Amours in the case if the court awarded restitution, reliance or lost expectation.
Rule
The considered three types of judicial remedies are defined as follows. “Judicial remedies under the rules stated in this Restatement serve to protect one or more of the following interests of a promisee: a) his ‘expectation interest,’ which is his interest in having the benefit of his bargain by being put in as good a position as he would have been in had the contract been performed;
- b) his ‘reliance interest,’ which is his interest in being reimbursed for loss caused by reliance on the contract by being put in as good a position as he would have been in had the contract not been made,
- c) his ‘restitution interest,’ which is his interest in having restored to him any benefit that he has conferred on the other party” (Blum and Bushaw, 2012, p.799).
Rule Explanation
It is possible to explain the judicial remedies in the following way. Expectation damages are intended to compensate the innocent party’s benefit of the bargain that would have been reached if the contract had been performed (for example, to compensate for the loss of future income). Contrastingly, the reliance interest is the reimbursement for the party’s losses caused by contract reliance (compared with the position when the contract never existed), while restitution interest is the reimbursement of any benefits of the innocent party conferred on the other party.
Analysis/application
In the Amours’ case, if the court awarded expectation damages, the value of reimbursement would be calculated as follows. The court would estimate the expected value of benefit (satisfaction) expected by the Amours and reimburse this value to the family. However, it is quite difficult to determine the value of expected benefits in this case.
If the court decided on reliance interest, then only the extra funds spent by the Amours would be returned, i.e $3,500 of installment to Jacque LeChef and $2,000 spent on reprinting the invitations. According to court’s decision, the value of $6,000 difference between LeChef’s and Gourmande’s price quotes might also be included into reliance damages (e.g. if Gourmande charged extra $6,000 for urgency).
In the case of restitution interest, it is also difficult to determine the amount of reimbursement. In this case, it is determined how much the breaching party gained from the violation of contract. To determine this value, it would be necessary to estimate LeChef’s benefit from breaching the contract.
Conclusion
In the considered case, expectation damages would be determined as the value of benefits expected by the Amours from having LeChef cater their wedding, reliance damages would include installment payment, the value of reprinting the invitations and, with some probability, the difference in the cost of catering between LeChef and Gourmande. For restitution, the value would equal to the amount of benefit gained by LeChef due to violating the contract. The most appropriate solution in this case is using reliance interest, since it allows to determine the value of reimbursement on a factual basis.
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