Valentine v. General American Credit Inc.
420 Mich. 256, 362 N.W.2d 628 (Mich. 1984)
Valentine worked for General.
She was fired. She sued for breach of contract.
Valentine argued that she
was entitled to job security and peace of mind because she was under a
contract with her employer General American Credit.
Since breach of her employment
contract led to mental distress, Valentine she should be able to recover
Valentine also wanted exemplary
damages (aka punitive
damages) which are generally not
given in Contract Law.
Trial Court dismissed the
claim of mental distress. Valentine
The Appellate Court affirmed.
The Appellate Court found
that unless a contract explicitly includes a provision for "job
security" employment can be terminated at any time by either party.
Job security is not an obligation imposed on an employer by law.
The Appellate Court agreed
that mental distress could be
foreseeable, and Valentine might not be made whole without receiving an
award for mental distress. However, she was out of luck because that
isn't the way Contract Law worked.
Hadley v. Baxendale, (9 Ex. 341 (Ex.Ct. 1854)) held that, in
general, you can recover for all damages that are foreseeable.
But mental distress is always a foreseeable consequence of breaching a
contract, and the Court didn't want to establish a precedent of awarding
damages for mental distress under literally every breach of contract!
The basic rule is that law
does not generally compensate for all losses suffered (e.g. legal fees).
In contract actions, the market price is the general standard.
Mental distress can be recoverable in contracts with a personal
element. These include breach of a
promise to marry. However, jobs are generally economic
contracts and do not, as such, contain
an element of personality.
An employment contract is not entered into primarily to secure the
protection of personal interests.
See Stewart v. Rudner (84 N.W.2d 816 (1957)) for example of a
contract with a personal element.