Supreme Court of
205
Facts:
Issue: Was the plaintiff entitled to (1) the reasonable cost
of doing the work the defendant was supposed to perform under the contract or
(2) the difference between the value of the land as it was originally and the
value of the land as it would have been had the defendant performed?
Rule: The proper measure of damages is the cost of
remedying the defect.
Analysis: The majority asserts that the contract in this case
should be looked at like a construction contract where the end product is the
“uniform grade”. The court says that by
analogy, the injury is the loss of a “physical structure” that was called for
in the contract, and even if the land is worth less than the cost of fixing the
“structure”, the proper award of damages is the cost of setting things
straight.
The dissenting opinion claims
that this award would put the plaintiff in a better position by far than
performance would have done. Had the
contract been performed, it is argued, the plaintiff would have basically
$12,000 in his pocket, whereas the damages suggested by the majority would give
the plaintiff five times that much. This
opinion suggests that the majority errs in applying tort principles of
punishment on what they consider to be a culpable contract breaker rather than
the appropriate “Golden Rule” standard, namely that the injured party needs
to be put in the position performance would have done.
Conclusion: The judgment was reversed and a new trial was
ordered.
Note
The defendant settled the
case for $55,000.
Back to The Goals of Contract Damages