ProfessorMelissa A. Hale
CaseCast™ – "What you need to know"
Brief Fact Summary. An actor and a media company entered into a contract for the actor to star in a film of a play for television. The actor had to repudiate the contract, and a question as to the damages owed by the actor to the media company arose.
Synopsis of Rule of Law. If a party cannot demonstrate an amount of lost profits they are entitled to, both expenditures incurred before and after the contract was concluded will be part of the damages award, if those expenditures "would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken."
Issue. If a party cannot demonstrate they lost profits, but can show they incurred expenditures prior to and after the contract was consummated, are they entitled as damages to their costs both prior to and after the contract was concluded?
Held. They are entitled to their costs, both prior to and after the contract was consummated if those costs were such "as would reasonably be in the contemplation of the parties as likely to be wasted if the contract was broken." The judge rejected the Defendant's argument that the Plaintiff was entitled to only expenses incurred after the contract was concluded. In doing so, the judge refused to follow the case of [Perestrello & Compania Limitada v. United Paint Co. Ltd.], which held "[t]he expenses preliminary to the contract ought not to be allowed. The party enters into them for his own benefit at a time when it is uncertain whether there will be any contract or not."
Discussion. This decision offers an interesting analysis of how contractual damages are computed if profits cannot be proven.