damages determination for a contract analysis to discuss Barbara's suit against Alfred. What are Barbara's rights, and what damages, if any, will she recover? Explain Article 2 of the Uniform Commercial Code pertaining to all types of transactions.

 

Alfred and Barbara own adjoining farms in Dry County, an area where all agriculture requires irrigation. Alfred bought a well-drilling rig and drilled a 400-foot well from which he drew drinking water. Barbara needed no additional irrigation water, but in January 1985, she asked Alfred on what terms he would drill a well near her house to supply better-tasting drinking water than the county water she has been using for years. Alfred said that because he had never before drilled a well for hire, he would charge Barbara only $10 per foot, about one dollar more than his expected cost. Alfred said that he would drill to a maximum depth of 600 feet, which is the deepest his rig could reach. Barbara said, "OK—as long as you can guarantee completion by June 1, we have a deal." Alfred agreed, and he asked for $3,500 in advance, with any further payment or refund to be made on completion. Barbara said, "OK," and she paid Alfred $3,500.

 

Alfred started to drill on May 1. He had reached a depth of 200 feet on May 10 when his drill struck rock and broke, plugging the hole. The accident was unavoidable. It had cost Alfred $12 per foot to drill this 200 feet. Alfred said he would not charge Barbara for drilling the useless hole in the ground, but he would have to start a new well close by and could not promise its completion before July 1.

 

Barbara, annoyed by Alfred's failure, refused to let him start another well. On June 1, she contracted with Carl to drill a well. Carl agreed to drill to a maximum depth of 350 feet for $4,500, which Barbara also paid in advance, but Carl could not start drilling until October 1. He completed drilling and struck water at 300 feet on October 30.

 

In July, Barbara sued Alfred, seeking to recover her $3,500 paid to Alfred, plus the $4,500 paid to Carl.

 

On August 1, Dry County's dam failed, thus reducing the amount of water available for irrigation. Barbara lost her apple crop worth $15,000. The loss could have been avoided by pumping from Barbara's well if it had been operational by August 1. Barbara amended her complaint to add the $15,000 loss.

Any breach of contract can be compensated through provision of damages to the injured party. The damages applicable in the given scenario are compensatory damages. These damages are awarded for compensating the non breaching party for the resultant loss caused by the breach of contract with an aim to "make the injured party whole again". This may be further divided into expectation damages, which cover an amount equivalent to that which was expected by the injured party from the contract, had it not been breached, on the basis of contract value or market value. Consequential damages compensate the injured party for any indirect damages which may have resulted due to the breach of contract other than contractual loss. For example in ability of contracting party to deliver a machinery a manufacturer in time main result 10th loss of business profits. Consequential damages identified by ensuring that the loss or damage has resulted specifically from the breach of contract and must essentially be a direct result of the breach, and be a result which was reasonably foreseeable by both parties when they entered into the contract. Equitable remedies can also be awarded for breach of contract when monetary damages may not properly compensate the injured.

The legal test of causation is utilised for determination of the type of loss caused by breach of contract depends upon the question of remoteness. Damage which is too remote cannot be attributed to be caused by breach of that contract even if there is a clear link existing between the breach of contract and the resultant loss. Within the contract law the traditional test of remoteness is generally the test of foreseeability. Loss is recoverable only if it was possible by both involved parties as being quite likely to occur. An important aspect of this is to understand what happens in the ordinary course of things. Secondly it is essential to understand existence of special circumstances which communicated to the defendant or otherwise in clear knowledge of both the parties.

Barbara can recover $3500 pay to Alfred as well as the $4,500 paid to Carl from Alfred, under compensatory damages under the expectational damages due to direct damages suffered because of non performance or breach of contract.

Barbara can recover damages for loss of her Apple crops worth $15000 under consequential damages clause of compensatory damages. However this invite the legal test of causation and remoteness principle may be applicable as neither of the involved parties, Barbara or Alfred, could foresee the failure of the Dam resulting in a shortage of water available for irrigation, no can the failure of a dam b something that happens in the ordinary course of things it is more activatable as a special circumstances but neither party being aware of this makes it a remote possibility. The causation principle used in assessment of damages for breach of contract requires process to not only be foreseeable at the time of contracting or the time of breach of Duty but can only be recoverable if there were really caused by breach of contract the duty. The test utilised on a preliminary basis is the but for test questioning the occurrence of the loss even if the breach had not happened. In this case, the causation is clear as had the well been done in time Barbara would have not lost her Apple crops as sufficient water for irrigation would have been available through the alternative source.

References : almatch.com/law-library/article/types-of-damages-available-for-breach-of-contract.html

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