Kearsarge Computer, Inc.
v. Acme Staple Co. (excerpt)
116 N.H. 705, 366 A.2d 467
(1976).
Facts: Kearsarge made a contract with Acme to provide data
processing services for a year. Acme
terminated the contract halfway through the year, claiming unsatisfactory
performance. Kearsarge sued. The trial court awarded the plaintiff the
full balance of the contract price of the services. Acme appealed on the basis that the damages
should have been reduced by the amount the plaintiff saved due to the breach
and the new business the plaintiff was able to gain since they didn’t have to
service the defendant anymore.
Issue: Should the plaintiff collect the full contract price
of the balance of the contract?
Rule: Damages should only be
reduced by savings that a plaintiff can actually save.
Analysis: The court rules that there was no “substantial
savings” for Kearsarge because it couldn’t reduce its costs on account of not
doing work for Acme anymore. Its
operating costs were largely fixed. The
court also says that Kearsarge didn’t gain any business from not servicing Acme
because data processing does not involve “unique personal services”, and so the
business is expandable and can take on as many clients as it wants whether or
not Acme is a client anymore in particular.
Conclusion: The court affirmed the trial court’s ruling.
Question
If Luten had diverted its
resources to building other bridges at the time of the repudiation of the
contract, its damages ought to be equal to “the contribution toward fixed
expenses that it would have received but for the breach”. Thus, the damages ought to be the full contract
price less any variable damages that were particular to the bridge that was not
completed due to the breach.
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Damages