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Law School Case Brief

Am. Mech. Corp. v. Union Mach. Co - 21 Mass. App. Ct. 97, 485 N.E.2d 680 (1985)

Rule:

The aim in measuring damages in the event of a breach is to place the injured party in as good a position as he would have been in had the contract been performed. An important aspect of this principle is that if a party suing for breach of contract has sustained a loss as a result of a breach, and the loss is of such a nature that it was reasonably foreseeable by the parties or actually within their contemplation at the time the contract was entered into, then that loss may be recovered in an action for damages.

Facts:

Plaintiff seller filed an action for breach of contract against defendants, prospective purchaser and its president. The lower court dismissed the seller's claim of unfair and deceptive practices and concluded that, although there was a breach of contract, the right to recover damages beyond nominal damages had not been proved, and that, in the absence of proof of a demand letter, recovery was not feasible since it was not pleaded. The seller appealed.

Issue:

Was the trial court's dismissal of the plaintiff’s complaint for unfair and deceptive practices and award of nominal damages on the seller's breach of contract claim correct?

Answer:

No.

Conclusion:

The court vacated the trial court's judgment and remanded the case. The court held that dismissal of the claim for unfair and deceptive practices was improper, and directed the trial court to enter judgment for the seller for its actual losses on the breach of contract claim. The court found evidence that warranted a finding of unfair and deceptive practices and held that recovery was not conditioned upon the sending of a demand letter. The court held that the correct measure of damages was the full amount of the actual loss, which was the contract price less the amount received for the property at a foreclosure sale of the real estate, machinery, and equipment. The court held that the purchaser did not meet its burden of proving that losses could have been avoided by reasonable effort and that there was no basis for reducing the damages.

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