Remedies for Breach of Contract

  As noted earlier, the preference for monetary relief is not based only on concerns of practicality, forced labor, and efficiency. Even if none of these problems exists, our legal tradition emphasizes damages as the standard remedy for breach of contract and disfavors specific relief in all but the most compelling circumstances. This is because the award of money damages was a remedy that could be granted by courts of law, whereas specific performance was granted only by a court of equity. (The distinction between law and equity is explained in section 2.5 and is discussed further in section 18.10.1.) Courts of equity were intended to intervene only when the available remedies at law were inadequate, and therefore a plaintiff who sought the equitable relief of specific performance was required to show that the nature of her expectation interest was such that the only means of achieving adequate relief was by the specific enforcement of the contract. Although courts of law and equity were merged some time ago, this ancient distinction still haunts our decisionmaking. As a result, even if it is practicable to give the plaintiff precisely what she expected, a money substitute is used in the great majority of cases: The plaintiff is awarded a sum of money that aims, as closely as possible, to put her into the economic position she would have been in had the contract been performed.

  What is the basic principle on which this monetary award is calculated? To illustrate it, let us add some facts to the case of Harmony’s breach of the voice-training contract: After Harmony’s breach, Sara was able to find another voice coach, who was available to give her equivalent lessons for the same amount of time, but who charged $1,800 for the course. By hiring him, she got the lessons expected for $300 more, so to place her in her expected position, damages of $300 must be awarded against Harmony. Of course, this is not exactly Sara’s expectation, because the teacher was different. However, we can seldom achieve the plaintiff’s exact position by paying her money. The aim is to get as close possible. It should also be apparent that the concern here is only with economic loss, so if Sara could obtain the equivalent lessons at exactly the same price as Harmony charged under the contract, she has suffered no financial loss at all and is entitled to no damages for the breach.