Lecture Notes: Limits on Recovery of Damages for Breach of Contract

Introduction

The lecture covers Unit 25, focusing on legal limits to recovering damages for breach of contract.
Three main limitations discussed: foreseeability, avoidability, and certainty.
Importance of understanding these limitations for both plaintiff and defense sides in contract disputes.

Foreseeability: If not satisfied, damages usually aren't recoverable.
Illustrated by the case: Southern Illinois Riverboat Casino Cruises, Inc. vs. HBG (Nedak Bobo Group).

Background:
- HBG designed a docking facility with a two-ramp design for a riverboat casino.
- Fire marshal denied certification due to insufficient egress.
- Hera's casino had to maintain a fire watch, incurring additional costs.
Legal Issue:
- HBG argued fire watch expenses were not recoverable under the Hadley rule.

Hadley Rule: Damages are recoverable if they are:
1. Naturally arising from the breach.
2. Within the contemplation of both parties at contract formation.
Application in the Case:
- Court denied summary judgment because foreseeability of damages was unresolved.
- Burden to prove foreseeability shifts between parties.

Machine Delivery Delay: Depends on knowledge of the delivery purpose.
Cab to Airport: Natural damages are likely minor unless a significant consequence was communicated.
New Tire on Car: Safety might be a foreseeable issue.
Providing a Loan: Specific knowledge increases potential foreseeable damages.
FedEx Envelope Delay: Difficult to foresee specific damages without disclosure.
House Sale Delay: Typical damages might arise, but not extraordinary ones like a fire.
Goods for Resale: Potential for extreme damages depending on the market and advance knowledge.

Two prongs: natural arising damages or contemplated damages at contract.
Next lesson will cover the limit of avoidability (also known as the duty to mitigate).