Groves
owned some land.A contract was
made with a gravel company to lease the land (for $105k), remove gravel, and
regrade the land so it is 'flat'.
Wunder
paid money and took the gravel, but did not level the land.They breached the contract on purpose
because they figured it was too expensive to level the land.
The
land, if improved would be worth only $12k more than it is now, while it
would cost $60k to level the land.
Trial
judge awarded $12k.That's the expectation damages standard.
Also
known as benefit of the bargain.
Appellate
court overruled and said that since it would cost $60k to level the land,
Wunder had to pay $60k.
Standard
should be cost of completion.
The
fact that leveling the land is not cost effective is irrelevant.
The
fact it was a willful breach is
important (although the trial judge did not find that to be the case).
There
was a strong dissent.
Wanted
to award difference in value, not cost of completion.
Groves
would become enriched beyond the contract if they were awarded $60k.
Peevyhouse vs. Garland agreed
with the dissent's reasoning.
In
this case, the plaintiff wanted money.However, you could also seek specific
performance which means that you don't want the money, you want them
to do the work.
Groves
never leveled the land, even though he won the big $$$.
Both
the majority and the dissent are applying the benefit of the bargain concept, but they are applying it
differently.In neither opinion,
they are assigning 'fines' or 'punishment' or any other standard.
Is
it cost to completion, or is it
difference in value?In most cases, they are the same.There is no 'black letter' answer.
Courts
tend to consider 3 major factors:
Amount
of the disproportion.The less
the disproportion, the more willing they are to award cost to completion.
The
extent to which the contract is subjective and personal vs.
commercial.If the person cares
about the completion, as opposed to a business deal, they are more
likely to award cost to completion.
The
willfulness of the breach.The
more willful the breach, the more likely to award cost to completion.
