Remedies

     The common remedy for breach of contract is compensatory damages, i.e. money that the breaching party must pay the aggrieved party to compensate the aggrieved party for the loss attributable to the breach.  In addition, as we see in  Commentary.Failures of performance that discharge duties of counter-performance, an uncured material failure of performance will typically discharge the aggrieved party from any performance it otherwise would still be obligated to perform.  There is no criminal sanction for breach of contract and, with a few exceptions, an aggrieved party is not entitled to punitive damages for breach of contract, i.e. money extracted from the breaching party as punishment for the breach and as deterrent to breaches by others.  We explore the exceptions in Freeman & Mills, Inc. v. Belcher Oil Co., a case arising because Belcher Oil refused to pay an accounting firm retained by Belcher's lawyers to assist in defense of another lawsuit against Belcher.  We also consider the recovery of punitive damages for the tort of fraudulent inducement to contract in Lazar v. Superior Court, involving a New York restaurant executive induced to relocate from his home of 40 years, with his family, to Southern California.  In Erlich v. Menezes, involving a residential construction fiasco, we consider whether a party aggrieved by breach of contract may recover damages for emotional distress, a type of recovery more typical in tort cases. 

     Before considering damages in Commentary.Compensatory damages, we first consider what seems to be a more obvious remedy, a court order that the breaching party perform the contract, a remedy known as "specific performance."  Such a remedy would usually give the aggrieved party close to what the contract led her to expect (unless the breaching party risks contempt of court by refusing to obey the court's order).  An order of specific performance cannot, of course, make the performance timely, unless in response to a suit for anticipatory repudiation brought prior to the breach, nor can it make the aggrieved party economically whole unless accompanied by monetary compensation for the lost time value of money and for the costs of seeking the remedy (most notably attorney's fees).  It is also not likely to repair the torn fabric of trust or erase psychological scars. 

     Courts order specific performance of a contract in only limited types of cases.  Much of the reason is historical.  Indulge a truncated historical foray.   Following the Norman conquest of England, two court systems emerged and evolved.  The royal courts, established under the authority of the king, developed a system a justice in civil cases relying upon "forms of action."   Each form of action addressed a specific wrong and a litigant initiated a form of action by the specific "writ" associated with the form of action.  Specific procedures, substantive law, and remedies evolved for each form of action.  A litigant was entitled only to those remedies permitted by the particular form of action.   Money damages was the remedy that evolved in connection with the several writs ("debt," "covenant," "tresspass-on-the-case," "indebitatus assumpsit," "special assumpsit," "general assumpsit") that came to be used for what we now call an action for breach of contract.  The royal courts eventually supplanted indigenous local courts (feudal courts, mercantile courts in markets and towns, and other local courts) that antedated the Norman conquest. 

     During the thirteenth and fourteenth centuries a second court, the "Chancery Court," also known as the "Equity Court," emerged in response to petitions by citizens to the Chancellor for relief that could not be obtained either in the local courts or within the rigid strictures of the forms of action in the royal courts.  In response to such petitions, the Chancellor might order equitable relief, that is, relief that could not otherwise be obtained through the local or royal courts.  In what we would now call actions for breach of contract, for which the remedy in the royal courts was only money damages, the Chancellor might order specific performance of the contract.  Notwithstanding the 19th century merger in the United States of law courts and equity courts into a unified court, and the adoption of unified systems of pleading causes of action, state and federal courts continue to adhere to traditional rules distinguishing between relief available "at law" and relief available "in equity."   Among those rules is the rule that a court will order specific performance of a contract (an equitable remedy) only where money damages (the remedy at law) is inadequate.  For an excellent, more thorough, yet still relatively brief historical survey of the development of the royal courts, the forms of action, the equity courts, and the merger of law and equity, see R.Casad, H.Fink, & P.Simon, Civil Procedure: Cases and Materials 399-425 (2d Ed. Michie), from which the preceding summary was derived.  Familiarity with this history is an important part of your legal education. 

     As a matter of common law, courts consider money damages an inadequate remedy for breach of contract in only a limited number of types of cases.  Chief among them are actions by a purchaser for breach by the seller of a contract for the sale of real property, because real property is deemed unique and its loss not compensable in money damages, and actions by a purchaser for breach by the seller of a contract for the sale of unique goods, such as a work of art (UCC 2-716) (see Hoffman v. Boone for an example).  Note also that a seller of goods is entitled to the price where the buyer has failed to pay (a form of specific performance) in some circumstances (UCC 2-709). 

     Even where damages are an inadequate remedy, equity has traditionally refused to order specific performance in a variety of types of cases.   For example, courts will typically not order specific performance of construction contracts or employment contracts because of concerns about the difficulty of framing and enforcing orders.  However, in cases involving athletes or artists with unique or extraordinary ability, courts may issue an order against the athlete or artist enjoining that person from performing elsewhere.  Some of our most famous athletes, including Nap LaJoie (baseball, early 1900's), Julius ("Dr. J") Erving (basketball, 1970's and 1980's), and Rick Barry (basketball, 1960's and 1970's) have been subject to such an injunction.  Smith, Waters, Kuehn, Burnett & Hughes, Ltd. v. Burnett considers whether an attorney fits the same bill.   

     Supplementary reading:  Farnsworth, 12.4-12.7; White & Summers, 6-6.