Where the contract provision which was breached was merely incidental to the main purpose in view, and where the economic benefit which would result to lessor by lesssee's full performance of the work is grossly disproportionate to the cost of performance, the damages which lessor may recover are limited to the diminution in value resulting to the premises because of the non-performance.
Lessors leased their premises to a coal mining company for coal mining purposes. The lessee agreed to perform certain restorative and remedial work at the end of the lease period, which it failed to perform. A case for damages was filed with the district court, which ruled in favor of the lessor for $5,000 - a fraction of the cost of performance, but more than the total value of the farm even after the remedial work was done. The case was appealed to the Supreme Court of Oklahoma.
Was $5,000 in damages a reasonable amount to collect for the breach in contract?
The Court held that Okla. Stat. tit. 23, §§ 97 and 97 limit the damages recoverable to a reasonable amount not contrary to substantial justice and they prevent plaintiffs from recovering a greater amount in damages for the breach of an obligation than they would have gained by the full performance thereof.