# K's Hypo

#### Strong

• 396
##### K's Hypo
« on: September 03, 2006, 04:14:02 PM »
Helen's Contracting agreed to build a huge horse for the town of Troy's annual pioneer parade. Helen agreed to build the horse for \$24,000. It was going to cost Helen \$20,000 to build the horse. After three month's work and Helen's expenditure of \$15,000, the horse was three fourths completed. On that date the town of Troy told Helen to stop construction on the horse. Troy had already paid Helen \$5,000 but refused to pay any more. Helen can sell the horse for \$2000 salvage value.

What is the loss in expectation value to Helen?
What is her loss based on the reliance theory?
What is her loss calculated on a theory of restitution?

I guess the salvage value is throwing me off. It doesn't say but I assume she keeps the horse.

Wouldn't restitution be \$0, she conferred no benefit to Troy?

#### eli250

• 144
##### Re: K's Hypo
« Reply #1 on: September 03, 2006, 04:21:36 PM »
I think

Reliance: \$8,000 + profit of \$4,000 = expectation of \$12,000

Salvage value is subtracted from reliance.
restitution is 0 in this case.

#### Woof!

##### Re: K's Hypo
« Reply #2 on: September 03, 2006, 05:54:16 PM »
Expectation is easiest. It is the benefit of the bargain. Assumes contract not breached so Helen's profit + costs=  \$4,000+\$15,000 = \$19,000  Assuming she does not keep horse = \$17,000 (She nets \$4,000 which is the benefit of the bargain)

Reliance puts Promissee (Helen) in same position before contract breached (only damages to correct breach) = \$15,000-\$5,000-\$2,000 = \$8,000

Restitution puts Promisor (Troy) back in same position before contract breached. In this case the \$5,000 goes back to Troy, \$15,000 to Helen so the net damages awarded are \$10,000.

Expectation \$19,000  /   \$17,000 if salvages horse
Reliance \$8,000  (horse is salvaged)
Restitution \$10,000  / \$8,000 if salvages horrse

#### holler21

##### Re: K's Hypo
« Reply #3 on: September 03, 2006, 06:21:49 PM »
I dont' know the answer to this problem, but I have a question:  Is this a 1L K class or an upper-level class? (It seems kind of early to be getting into remedies...unless the class you're taking is Remedies)

#### starter

##### Re: K's Hypo
« Reply #4 on: September 03, 2006, 06:28:41 PM »
Expectation is easiest. It is the benefit of the bargain. Assumes contract not breached so Helen's profit + costs=  \$4,000+\$15,000 = \$19,000  Assuming she does not keep horse = \$17,000 (She nets \$4,000 which is the benefit of the bargain)

Reliance puts Promissee (Helen) in same position before contract breached (only damages to correct breach) = \$15,000-\$5,000-\$2,000 = \$8,000

Restitution puts Promisor (Troy) back in same position before contract breached. In this case the \$5,000 goes back to Troy, \$15,000 to Helen so the net damages awarded are \$10,000.

Expectation \$19,000  /   \$17,000 if salvages horse
Reliance \$8,000  (horse is salvaged)
Restitution \$10,000  / \$8,000 if salvages horrse

19K - 15K for costs = 4K profits, which was her expectation

The expectation could be further reduced to 12K if she salvages the horse.

#### J D

• 1386
• Lust isn't one of the 7 Deadly Sins for nothing...
##### Re: K's Hypo
« Reply #5 on: September 03, 2006, 06:34:15 PM »
I dont' know the answer to this problem, but I have a question:  Is this a 1L K class or an upper-level class? (It seems kind of early to be getting into remedies...unless the class you're taking is Remedies)

Some, perhaps most, contracts courses in 1L do damages and remedies first.  We didn't, but others do it differently, from what I understand.

#### holler21

##### Re: K's Hypo
« Reply #6 on: September 03, 2006, 06:36:37 PM »
Gotcha.  Seems kind of strange though to begin with a remedy for breaking K when you don't build a foundation of what a K includes, etc.

#### CoxlessPair

• 770
##### Re: K's Hypo
« Reply #7 on: September 03, 2006, 06:42:06 PM »
My Ks class started with remedies. It was a solid 3 weeks before I even know what offer/acceptance/consideration entailed.

I think it's a pretty back-asswards way to teach a course.

Let's teach crim law with sentencing first and the elements of manslaughter later.

#### J D

• 1386
• Lust isn't one of the 7 Deadly Sins for nothing...
##### Re: K's Hypo
« Reply #8 on: September 03, 2006, 06:43:04 PM »
Gotcha.  Seems kind of strange though to begin with a remedy for breaking K when you don't build a foundation of what a K includes, etc.

I guess, but thinking back, I suppose the two really aren't all cumulative of each other; you should be able to figure out what the damages are without having to know anything about what's required for contract liability in the first place.  But conceptually, it does seem a bit odd.  Perhaps I'm old-fashioned, but I generally like to start my stories off at the beginning.

#### Strong

• 396
##### Re: K's Hypo
« Reply #9 on: September 03, 2006, 07:24:30 PM »
Reliance       \$15,000 - \$5,000 - \$2,000 = \$8,000

Restitution    \$0.00 - it didn't ask about Troy's restitution, she gave them nothing

Expectancy     \$10,000 + \$4,000 - \$2,000 = \$12,000.00

This is what I got, assuming salvage is a given.