Al A Thumbnail Sketch of Damages

Al. A THUMBNAIL SKETCH OF DAMAGES

Al.l Contract Cases

A. Scope of Damages

1. Must arise naturally and normally from the breach;

2. Must be foreseeable - such as the parties should have contemplated when the contract was made as a probable result of a breach [OCGA 13-6-2].

B. Specific measures of damages

1. Object of giving damages is to put non-breaching party in as good a position as if contract had been performed. [243 Ga. 870, 257 SE2d 285 (1979)]; should include damages which fulfillment of contract would have prevented or which breach entailed [162 Ga.App. 633, 292 SE2d 509 (1982)];

2. Measure is not cost to Plaintiff of his own performance but what was suffered by other party's breach [157 Ga.App. 640, 278 SE2d 182 (1981)];

3. Injured party should not be put in better position than if contract had been performed [ibid.].

4. Where contract is anticipatorily breached by a purchaser, seller may recover both cost of partial performance and expected profits but total may not exceed contract price [123 Ga.App. 557, 181 SE2d 871 (1971)].

5. In construction contracts where work is incomplete or defective

a. Measure of damage is difference between the fair market value of the work actually done and the value it would have if completed under the contract.

b. If the contract can be completed at reasonable cost, then the best measure is the cost of completing the contract or remedying the defects [201 Ga.App. 734, 412 SE2d 279 (1991); 173 Ga.App. 429, 326 SE2d 779 (1985), 163 Ga.App. 836, 296 SE2d 154 (1982)]. Alternate recent formulation: damages for defective construction are determined by "measuring the cost of repairing or restoring the damage, unless the cost of repair is disproportionate to the property's probable loss of value." Pollman v. Swan, 289 Ga. 767, 769(2), 716 SE2d 191 (2011).

c. Where the defect cannot be remedied at reasonable cost Plaintiff must show damages based upon difference in fair market value between actual work and work in conformance with contract [187 Ga.App. 273, 370 SE2d 32 (1988); 155 Ga.App. 808, 273 SE2d 211 (1980); 65 Ga.App. 683, 16 SE2d 234 (1941)].

EXAMPLE - A building built in the wrong location or not according to specifications might cost nearly as much to make conform as to build in the first place. As completed, the structure may be of substantial value. The Plaintiff would have to prove the fair market value difference between the conforming and non-conforming constructions.

On the other hand, the fact that the defective performance rendered is already more valuable than the contract price does not prevent a suit for damages for non-compliance with the contract since the buyer is entitled to the benefit of the bargain [137 Ga.App. 465, 224 SE2d 112 (1976)].

6. Construction contracts - wrongful termination: net profit the contractor would have received. Contractor must show the amount which would have been required to complete the contract and credit amounts received and value of unused materials that could be used on future projects [235 Ga.App. 265, 508 SE2d 739 (1998) (case points out contractor also did not show usual percentage of profits)].

7. Sale of Goods - Buyer's remedies - Buyer has a choice:

a. Goods not accepted or rightfully rejected -Buyer may "cover" by purchasing in good faith and without unreasonable delay goods in substitution and recover the difference in the cost of cover plus any incidental or consequential damages but less any expenses saved in consequence of seller's breach [OCGA 11-2-712];

OR

b. Buyer may recover the difference between the market price at the time when buyer learned of the breach and the contract price plus consequential expenses but less expenses saved; [OCGA 11-2-713]

OR

c. For accepted goods recover difference in value at the time of acceptance and value they would have had if conforming to contract [OCGA 11-2-714].

8. Sale of Goods - Seller's remedies OCGA 11-2-7031:

a. Seller may stop delivery;

b. Seller may resell goods OCGA 11-2-7041;

c. Seller may seek market price difference and, in proper case, profits OCGA 11-2-7081;

d. In some cases Seller may identify goods to contract, dispose of them (even selling for scrap and sue for contract price [look at OCGA 11-2-704, 709)1.

9. Damages to leased premises - cost of restoring premises to prior condition [Goody Products, Inc. v. Development Authority of City of Manchester, 320 Ga.App. 530, 541, 740 SE2d 261 (2013)1.

10. Contractual definitions of damages

a. Parties may generally provide their own measure of damages in the contract so long as that measure is not unreasonable [526 F.2d 922]. In particular, parties may provide for liquidated damages upon breach but may not provide for penalties. [OCGA 13-6-1, 13-6-7, 13-6-3].

b. Liquidated damage provision in contract enforceable where:

• the injury caused by the breach is difficult or impossible to estimate accurately;

• the parties intended to provide for damages rather than a penalty;

• the sum is a reasonable pre-estimate of the probable loss [237 Ga. 227, 227 SE2d 340 (1976); 155 Ga.App. 578, 271 SE2d 710 (1980)].

EXAMPLES - The following have been held as invalid penalties: payment of a fixed sum regardless of time of breach where the amount of damages in actual fact was dependent on when the breach occurred; a $500.00 sum for non-delivery of a money order where $500.00 bore no relation to the amount of money sent; provisions in a purchase contract for the seller to retain as rent the sums paid on the purchase price since the value of the property for rent was capable of computation and not uncertain; payment of the entire balance of an unexpired rental contract as liquidated damages where the landlord had reentered and resumed control of the premises; acceleration of lease payments on car for ten years without reduction to present value. In contrast, a lease provision that personal property remaining on the property after termination of the lease shall become the property of the landlord is not subject to liquidated damages analysis [196 Ga. App. 331, 396 SE2d 62 (1990)].

C. Reasonable Certainty - Contract damages must be shown with reasonable certainty; mere difficulty in fixing the exact amount should not bar damages, but their amount should not be left to speculation, conjecture and guesswork.

NOTE - This rule seems to be in the process of being relaxed with respect to automobiles, common household articles (see A1.3C, D below).

A1.2 Tort Cases

A. General damages:

1. The law presumes damages flow from any tortious act and generally may be recovered without proof of a specific amount [OCGA 51-12-2; see 262 Ga.App. 659, 586 SE2d 384 (2003) for discussion of...