Fantasy Vacation with the Stars Corp. ("Fantasy Corp.") is a new business started by the CEO and owner, Leo, to provide "fantasy vacation" packages. These vacations allow participants to "make a movie" with a Hollywood personality and imagine themselves movie stars for one week. Leo charges each vacation "guest" $15,000 for a week of "pampering," instruction on making movies, rehearsals, and a "starring" role in a short, videotaped film with a "nationally known" television or movie star. Leo also hoped that "bloopers" and "outtakes" from the vacation videotapes would ultimately become the basis for the television series. For its first vacation held in Palm Springs, California, Fantasy Corp. received some media coverage, but the company lost $100,000 on the event. The event attracted only nine guests. There were no useful bloopers or outtakes from the first event. Undeterred, Fantasy Corp. planned its second vacation. Sari is a famous Hollywood actor at the end of her career. Sari is well known for her outrageous personality and extravagant lifestyle. In March, Fantasy Corp. entered a contract with Sari whereby Sari agreed to be part of a weeklong fantasy vacation in San Antonio, Texas in the first week of May in return for a fee of $20,000 plus specified expenses. In April, two weeks before the event, Sari repudiated the contract. At that time, Fantasy Corp. had only booked two guests for the event. Fantasy Corp. cancelled the event and returned the fees to the guests. At that point, Fantasy Corp. ceased operating and sued Sari for breach of contract. During the remedies phase of the trial, Fantasy Corp.'s CEO, Leo, offered the following testimony: Vacation Profits. Leo testified that Sari's breach caused Fantasy Corp. to go out of business. Leo estimated that if Fantasy Corp. were still operating it would have made $250,000 in profits from future fantasy vacation events a $25,000 profit from each of ten future events. To break even on any given vacation, the company would need to have at least 20 guests. The company had not planned any vacations beyond the San Antonio event. Television Series Profits. Leo also testified that Fantasy Corp. could have made at least $1 million in future profits from the television series. Leo said that unidentified producers and others were enthusiastic about the "concept" of such a series. However, Leo also admitted that he had not sold a television pilot, let alone a series, based on the fantasy vacation videotapes. Additionally, Leo did not have the consent of each of his guest actors to use the vacation movie in a television series. Expenses. Leo was able to submit evidence that showed expenditures by Fantasy Corp. of $20,000 for marketing and promotion of the San Antonio event, $10,000 related to preparations for the filming of the San Antonio event, and $30,000 in personnel costs and travel expenses also related to the San Antonio event. Analyze the degree to which Fantasy Corp. can recover lost profits related to the breach by Sari. In the alternative, what reliance damages if any are available? Explain your reasoning. 2. Club is a corporation that promotes boxing matches. Club consists of officers of Club who are salaried employees. Champ holds the title of World's Champion Heavyweight Boxer. On March 13, Club entered into a contract with Champ. Under the terms of the written agreement, Club was to promote a fight in Chicago on September 22 between Champ and Contender, another well-known boxer, for the championship of the world. Champ was to receive: (1) $10 immediately, receipt of which was acknowledged; (2) $5 million in cash at least ten days before the date fixed for the contest; and (3) 50% of the net profits over and above $20 million. In addition to agreeing to the fight, Champ also agreed (a) to have his life and health insured in favor of Club, and (b) not to engage in any boxing match after the date of the agreement and prior to the date on which the contest was to be held. On March 8, prior to signing the Champ contract, Club entered into a contract with Contender. The "Contender Contract" required Contender to fight Champ on September 22 in Chicago. The agreement required Club to deposit $500,000 in escrow to be paid over to Contender ten days before the boxing match. In July, Club sent an email to Champ, trying to arrange to have the boxer examined by the insurance company's physician. On July 10, Champ sent an email back stating, "Entirely too busy training for another match. In any case, you have no contract. Champ." At this time, Champ was preparing himself for a boxing contest with another contender for the title, to be held in Philadelphia on September 15. Club made repeated attempts to get Champ to comply with the agreement. Champ refused and went forward with the fight against the other contender in September. What is the legal effect, if any, of Champ's July 10 email? Assume that Club successfully brought a breach of contract claim. During the remedies phase, Club sought lost profits of $100 million but was unable to prove those damages with reasonable certainty. Club then sought the following as reliance damages. Would any of the following claims be recoverable as reliance damages? If so, determine if these are essential or incidental reliance damages. Explain your reasoning. Contender Contract. Under the Contender contract, the club was to pay Contender $500,000. Club presented no evidence showing that the $500,000 was paid. Miscellaneous Costs Incurred. The initial $10 paid to Champ under the agreement. $30,000 paid to an architect in April to design plans for the boxing ring that was to be built for the match between Champ and Contender. Wages paid to office assistants who were hired from April 1 to July 10 to help with the Champ-Contender fight. Wages paid to the same office assistants as above from July 10 to September 22 who were retained in the hope that Champ would change his mind. Regular salaries paid to the officers of Club from March 13 to July 10. Expenses incurred in June in arranging Champ's physical examination for insurance purposes. Travel expenses incurred for the purpose of procuring and signing the agreement with Champ. Attorney's fees. In August, Club sought an injunction to prevent the other fight Champ planned to hold, incurring attorney's fees in the process. Club was successful in getting the injunction, but Champ ignored it. 3. Mistletoe Express Service is a shipping company. Locke had a local delivery service. Mistletoe and Locke entered into a contract under which Locke would perform a pickup and delivery service for Mistletoe at various locations in Texas. The contract term was one year, after which, the agreement would continue on a month-tomonth basis until either party terminated it by 30 days' written notice. In order to perform, Locke needed to make certain investments. She spent $10,000 of her savings to build a ramp. She also borrowed $25,000 from a bank, which she used to purchase two vehicles. Locke's company never made a profit, although the losses decreased each month while the contract was in force. After 5 months, Mistletoe notified Locke that it planned to cancel the contract effective in 30 days. Locke closed her business and sold the vehicles for $20,000, which she used to pay down the loan. She still owes $5,000 to the bank and has paid $1,000 interest on the loan. While her company was in business, Locke used her personal credit cards to pay company expenses. Locke carries a $6,000 debt for these expenses. The customized ramp is worth $2,000 as scrap. Locke sued Mistletoe for breach of contract. During the trial, Locke testified that it was unclear to her whether her company would have ever made a profit by the end of the year. Based on Locke's testimony, Mistletoe argued that Locke is not entitled to any damages because she has not proven whether she would have had a loss or a gain if the contract had not been breached. You are the judge in a non-jury trial hearing the case. You have already determined that Mistletoe breached the contract. Decide whether Locke is entitled to damages and, if so, how much. Address Mistletoe's argument and explain your reasoning for your final decision.