Kenford Co. v. Cty. of Erie

73 N.Y.2d 312, 540 N.Y.S.2d 1, 537 N.E.2d 176 (1989)

 

RULE:

In actions for breach of contract, the nonbreaching party may recover general damages which are the natural and probable consequence of the breach. In order to impose on the defaulting party a further liability than for damages which naturally and directly flow from the breach, that is, in the ordinary course of things, arising from a breach of contract, such unusual or extraordinary damages must have been brought within the contemplation of the parties as the probable result of a breach at the time of or prior to contracting. In determining the reasonable contemplation of the parties, the nature, purpose and particular circumstances of the contract known by the parties should be considered, as well as what liability the defendant fairly may be supposed to have assumed consciously, or to have warranted the plaintiff reasonably to suppose that it assumed, when the contract was made. 

 

FACTS:

The landowner entered into an agreement with the county wherein the landowner agreed to donate land for a proposed stadium site. Thereafter, the landowner bought property in the periphery of the site. When it was discovered the county underestimated the cost of building the stadium, the contract was terminated. A jury awarded the landowner damages, but the court held the landowner was not so entitled.

ISSUE:

Can a party to a construction project be held liable for the appreciation value of peripheral land, for which the non-breaching party holds an option to purchase if the construction project is cancelled?

ANSWER:

No.

CONCLUSION:

The court found there was no provision in the contract or evidence otherwise to demonstrate that the parties contemplated the county was undertaking a responsibility for the lack of appreciation in the landowner's peripheral parcels in the event the stadium was not built. The landowner assumed the risk that its financial gain expectations would not be realized if the stadium was not built.

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