BREACH OF CONTRACT damages 8.45 model jury charge
A. General
A plaintiff who is awarded a verdict for breach of contract is entitled to
compensatory damages for such losses as may fairly be considered to have arisen
naturally from the defendant’s breach of contract. Alternatively, plaintiff may
be entitled to such damages as may reasonably be supposed to have been
contemplated by both parties, at the time they made the contract, as the
probable result of the breach of such contract.
Compensatory damages for breach of contract are designed under the law to
place the injured party in as good a monetary position as he/she would have
enjoyed if the contract had been performed as promised.
Cases:
525 Main Street Corp. v. Eagle Roofing Co., 34 N.J. 251 (1961); Marcus & Co, Inc. v. K.L.G. Baking Co.,
Inc., 122 N.J.L. 202 (E. & A. 1939).
NOTE
TO JUDGE
There are specific subsidiary rules of damages
formulated for various situations which are subordinate to the broad rule of
damages expressed above. These subsidiary rules of damages as well as the broad
rule are guides requiring considered judicial discretion as to applicability in
a particular situation. See 525 Main Street Corp. V. Eagle Roofing Co.,
34 N.J. 251 (1961). CHARGE 8.45 ― _Page 2 of 5
As to building contracts, the disappointed
owner may recover the costs of completing the promised performance or making
necessary repairs, unless under the facts it is impossible to do so or the
costs of completion or repairs would constitute unreasonable economic waste, in
which event the measure of damages is the difference in value formula. Restatement,
Contracts, Sec., 346 (1)(a). In the case of Price v. B. Construction Co.,
77 N.J. Super. 485 (App. Div. 1962) involving a clause in a contract
warranting that the cellar in a new home being sold would be free from water
for a period of one year from date of closing title, the court concluded that
the parties bargained (1) not for a one-year result, but (2) for work of
greater expectable life but supported by a guarantee for a portion of that
period; and that the proper measure of damages was the “entirety of such sums
of money as were required to be expended by (plaintiffs) in correcting the
defect complained of.”
In cases involving a breach of contract for purchase
of real estate there are various elements of damages. The charge must be molded
to the facts of each case. See Donovan v. Bachstadt, 91 N.J. 434
(1982).
B. Loss of Profits
If you should determine that the plaintiff is entitled to a verdict, the
law provides that the plaintiff is to be reasonably compensated for any damage
sustained by him/her which was proximately caused by the defendant’s conduct in
breach of the contract. In arriving at the amount of the award, you should
include all damages suffered by the plaintiff because of lost profits within
the reasonable contemplation of the parties at the time of the making of the
contract; that is to say, profits which the plaintiff would have made but for
the breach of the contract by the defendant. CHARGE 8.45 ― _Page 3 of 5
If you find that the plaintiff has in fact
suffered loss of profits as a result of the defendant’s breach of contract,
then the fact that the precise amount of plaintiff’s damages may be difficult
to ascertain should not affect the plaintiff’s recovery. The plaintiff is to be
awarded damages for such loss of profits as is capable of determination with
reasonable certainty.
In arriving at the amount of any loss of profits sustained by the
plaintiff, you may consider any past earnings of the plaintiff in his/her
business, as well as any other evidence bearing upon the issue.
Cases:
Van
Dusen Aircraft Supplies, Inc. v. Terminal Const. Corp., 3 N.J. 321 (1949); Feldman v. Jacob Brasfman & Son, Inc.,
111 N.J.L. 37 (E. & A. 1933); Interchemical Corp. v. Uncas
Printing & Fin. Co., Inc., 39 N.J. Super. 318, 329 (App. Div.
1956) a defendant whose wrongful act creates the difficulty may not complain
that the amount of damages cannot be accurately fixed; Casler v. Weber,
27 N.J. Super. 396 (App. Div. 1953); De Ponte v. Mutual Contracting
Co., 18 N.J. Super. 142, 147, 148 (App. Div. 1952); Restatement,
Contracts, Sec. 331 (“Where the evidence does not afford a sufficient basis
for a direct estimation of profits, but the breach is one that prevents the use
and operation of property from which profits would have been made, damages may
be measured by the rental value of the property or by interest on the value of
the property.”) CHARGE 8.45 ― _Page 4 of 5
C. Mitigation of Damages
If you find that the defendant [breached the contract*] and
that damages resulted, you must also determine if the plaintiff has made
reasonable efforts to lessen or reduce his/her damages. The law requires that
party who suffers injury or damage because of a [breach of contract*] to make a
reasonable effort to avoid or minimize the loss by taking advantage of such
reasonable business or employment opportunities he/she may have under the
circumstances. A party cannot recover damages for a loss that he/she could have
avoided by reasonable efforts.
If you find that the plaintiff could have avoided or minimized his/her loss
by taking advantage of a business or employment opportunity that was reasonably
available under the circumstances, you must subtract from plaintiff’s award the
damages which could have been avoided. For example, an employee who claims to
have lost earnings because he/she was wrongfully fired is free to work
elsewhere. Any subsequent earnings that employee could reasonably have earned
if he/she had taken advantage of an available employment opportunity must be
subtracted from the damages he/she claims to have suffered as a result of
his/her wrongful termination.
The burden of proof is on the defendant to show that the plaintiff could
reasonably have avoided or minimized his/her damages. In the employment
example,
* If the case is an employment case and there is no breach of contract
involved, the words "breach of contract" and its variations should be
replaced with "wrongful termination" as defined by this charge, or
the appropriate variation. CHARGE 8.45 ― _Page 5 of 5
the defendant employer has the burden of
showing the earnings the employee could reasonably have realized had the
employee taken advantage of available substitute employment. If the defendant
satisfied that burden, then you must reduce the amount of damages the employee
would otherwise receive by the amount of the loss that the employee could
reasonably have avoided.
Cases:
Frank Stamato & Co. v. Borough of Lodi, 4 N.J. 14, 21 (1950); Sandler v. Lawn-Mat Chemical &
Equipment Corp., 141 N.J. Super. 437, 455 (App. Div.), certif.
denied, 71 N.J. 503 (1976); Harvard v. Bushberg Bros., 137 N.J.
Super. 537, 542 (app. Div. 1975); Henry Clay v. Jersey City, 74 N.J.
Super. 490 (Ch. Div. 1962), aff’d, 84 N.J. Super. 9 (App. Div.
1965). See also Restatement (Second) of Contracts §350, comments a, b
and c (1979).
