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Introduction

Read the overview below and complete the activities that follow.

Remedies for Breach of Contract

In the case below, a municipality backs out of a contract to have a bridge built. The contractor has already begun production and incurred costs.

CONCEPT REVIEW:

The overall goal of damages in breach of contract suits is to put the parties where they should have been if the contract had been performed. But the solution simply ordering the parties to perform is rarely enough. Damages vary greatly based on the nature of the contract itself, as well as the extent to which performance is underway.

Remedies

Read the short case below, and select the best answer to each question that follows.

The Randolph Bridge Company (RBC) agrees to build a suspension bridge in the city of Detroit. Detroit plans to pay RBC $50 million. RBC's anticipated costs, including labor, materials and so on, are $40 million. Construction is anticipated to take six months. One month into the project, RBC has put $10 million into the project. Detroit tells RBC at this point that it no longer wants the bridge, and plans to breach the contract.

According to what standard will RBC's damages be measured?

Multiple Choice

• RBC will recover the costs that it has incurred.
• RBC will be given the benefit of its bargain.
• RBC will recover a fraction of the contract price that is proportionate to the costs RBC has incurred.
• RBC will recover damages incurred in reliance.
• RBC will recover nothing.