Full access allows:
- Solve all tests online without limits;
- Remove all advertisements on website;
- Adding questions to favorite list;
- Save learning progress;
- Save results of practice exams;
- Watching all wrong answered questions.
7. In an action by the farmer against the landowner for damages, the farmer is entitled to recover
On January 30, the farmer accepted a conveyance and possession of Greenacre and paid the $500,000 purchase price, but notified the landowner that he was reserving any rights he might have to damages caused by the landowner's breach. The farmer intended to use the land for raising cattle and had entered into a contract for the purchase of 500 head of cattle to be delivered to Greenacre on January 15. Because he did not have possession of Greenacre on that date, he had to rent another pasture at a cost of $2,000 to graze the cattle for 15 days. The landowner had no reason to know that the farmer intended to use Greenacre for raising cattle or that he was purchasing cattle to be grazed on Greenacre.
A landowner contracted in a signed writing to sell Greenacre, a 500-acre tract of farmland, to a farmer. The contract provided for exchange of the deed and purchase price of $500,000 in cash on January 15. Possession was to be given to the farmer on the same date. On January 15, landowner notified the farmer that because the tenant on Greenacre wrongfully refused to quit the premises until January 30, the landowner would be unable to deliver possession of Greenacre until then, but he assured the farmer that he would tender the deed and possession on that date. Throughout the month of January, the market value of Greenacre was $510,000, and its fair monthly rental value was $5,000.
Comments (0)
There are no comments at the moment. If you found an error or think question is incorrect, tell everyone about it
Only signed in users can write comments
Signin
Here, the landowner committed a minor breach against the farmer. The farmer was still obligated to perform, but still suffered damages for which he can potentially recover (lost rents). Therefore, since landowner only committed a minor breach, the farmer can only seek his expectation damages. The farmer can recover his expectation damages, but no other damages. This question is a common law contract question, that asks what remedies are available for breach.
C is correct. The farmer is only going to be able to seek expectation damages as a remedy. Expectation damages provide that the non-breaching party receives the benefit of the bargain — that is, everything he reasonably expected from the agreement. Here, the farmer reasonably expected to get the property on the 15th and could reasonably expect to get the benefit of all the profit from the land starting on the 15th. Since the property was not delivered until the 30th, the farmer was entitled to all the profit realized by the land from the 15th to the 30th: $2,500 in rent.
The farmer will not be able to recover for having to rent the land to graze his cattle. The farmer expected another benefit from the contract: the ability to graze the cattle he had ordered on the land. These types of damages are called consequential damages. Consequential damages can be recovered on a contract if the damages were the natural and probable consequences of the breach. In order for consequential damages to be recoverable, they have to be «...in the contemplation of the parties at the time the contract was made» or otherwise foreseeable, the original standard from Hadley v. Baxendale under English common law.
Here, the facts state the landowner had no reason to know that the farmer intended to use the land to graze cattle, so it was not a result that was contemplated by both parties in the event of a breach. Therefore, the farmer is entitled to the $2500, his expectation damages, and cannot recover for having to rent space to graze his newly purchased cattle.
A is incorrect. The farmer reserved his rights to claim damages for partial breach, although it was unnecessary. The landowner caused insecurity in the farmer regarding his performance of the contract by failing to deliver the deed and control of the land. Under common law, the farmer is allowed to suspend performance — his payment — until the landowner is ready to perform. There was no need for the farmer to «reserve his rights,» although this is a very good hint that the farmer had not waived said rights.
B is incorrect. The market value of Greenacre relative to the contract price is not relevant to determining damages for delay in delivery of possession. The difference in price between the contract price and the estimated value of the land may be important if the seller had not delivered the land. However, in the current question, this answer is a red herring. The difference in value sounds like it might be important, but it is not.
D is incorrect. The $2,000 cost of renting another pasture was not reasonably foreseeable to the landowner as a result of his breach, and therefore, not recoverable as consequential damages. As discussed above, consequential damages are indirect losses that are foreseeable as a result of the breach. In this case, the farmer certainly suffered indirect loss, however, it was not foreseeable to the landowner, per the wording of the question. Therefore, consequential damages are not recoverable.