Telespectrum Worldwide, Inc. v. Grace Marie Enterprises, Inc.

Brief Fact Summary.

Plaintiff agreed to provide telemarketing services for Defendant, on behalf of Defendant’s clients, who were running political campaigns. The weekend before the election, Plaintiff’s computer servers crashed, and it was unable to transmit is call data to Defendant. Defendant discounted its services by $162,950 when it billed its clients. Its clients paid Defendant $828,164. Defendant’s profit margin on that amount was $282,123. Defendant paid Plaintiff $213,801, which was only a portion of Plaintiff’s invoice, and Plaintiff sued for full payment.

Synopsis of Rule of Law.

A party who breaches a contract is entitled to recover the benefit he has conferred on the non-breaching party by his partial performance.

Facts.

Telespectrum Worldwide, Inc. (Plaintiff) agreed to provide telemarketing services for Grace Marie Enterprises, Inc. (Defendant), on behalf of Defendant’s clients, who were running political campaigns. Plaintiff provided some of the agreed-upon services, but on the weekend before election day, its computer servers crashed, and it was unable to transmit its call data to Defendant. As a result, Defendant discounted its services by $162,950 when it billed its clients. Its clients paid Defendant $828,164. Defendant’s profit margin on that amount was $282,123. Defendant paid Plaintiff $213,801, which was only a portion of Plaintiff’s invoice, and Plaintiff sued for full payment.

Issue.

Whether a party who breaches a contract is entitled to recover the benefit he has conferred on the non-breaching party by his partial performance.

Held.

Yes. Judgment is entered in favor of Plaintiff in the amount of $169,290, which is the amount Defendant’s clients paid, less Defendant’s profit, less the amount by which Defendant discounted its services to its clients as a result of Plaintiff’s breach, less the amount already paid to Plaintiff ($828,164 – $282,123 – $162,950 – $213,801 = 169,290). A party who breaches a contract is entitled to recover the benefit he has conferred on the non-breaching party by his partial performance.

Discussion.

A party who breaches a contract may recover (1) restitution for any benefit that he has conferred by his partial performance or (2) reliance in excess of the loss he caused by his breach. The party seeking restitution must show the amount of the benefit provided, and his recovery may not exceed the other party’s increase in wealth. In this case, Plaintiff is not entitled to full payment, because it was the breaching party and the server crash was not an event beyond Plaintiff’s reasonable control. Plaintiff is, however, entitled to the portion of the amount that Defendant was paid by its clients that is attributable to Plaintiff’s work under the contract.