Measuring and Compensating Loss Resulting from a Breach

Case: Sullivan v. O'Connor (1973 MA) [363 Mass. 579]

Parties: Plaintiff - Sullivan

Defendant - O'Connor

Procedural History: Verdict for P for a breach of contract suit. Now reviewing
on issue of damages.

Facts: P's claims: (1) for breach of contract: D supposed to perform plastic
surgery to enhance her beauty, but instead disfigured her, and (2) for
malpractice: D guilty of negligence during surgery. P won on breach of contract
claim, but not for the negligence claim. P was professional entertainer, and D
knew this before surgery; however, P did not prove that the disfigurement caused
her loss of employment. Judge instructed jury that P entitled to recover: (a) out
of pocket expenses incident to the operation ($622.65), (b) damages foreseeable
from D's breach (emotional effects of the disfigurement, and in connection to P's
profession), (c) pain & suffering of 3rd operation (but not first 2 because that
was expected, the 3rd was to try to fix the disfigurement caused by the first 2).
P awarded $13,500.

Issue: What damages are owed?

Holding: P is awarded reliance damages, including restitution and all other

damages that flowed from the breach (including her psychological injuries).

Reasoning: Contracting parties are to be put in the position that they’d have
been in had the contract been performed as promised, and psychological damages are
part of the equation.
· Reliance damages should be granted when expectation damages are seen as
excessive (because, for example, the defendant was not liable for negligence) but
restitution damages are seen as insufficient (because the agreement ought to be at
least minimally enforced).
· The ruling seems to have been made at least partially on policy grounds. The
court does not want to encourage “defensive medicine” by making it easy to sue for
breach of promise. On the other hand, the court doesn’t want to make it so
difficult to sue for breach of promise that patients can only sue for malpractice
(“there is fear that the public might be exposed to the enticements of
charlatans”).
· There is no rule barring recovery for psychological injury.
· Commercial losses are also covered, provided they were foreseeable and can be
proven.
· The Court did not rule on the question of expectation damages because the
plaintiff waived her appeal on that matter.
· Expectation interest - promisee's interest in having the benefit of the bargain
by being put in as good a position as he would have been in had the contract been
performed.
○ Received here.
○ Expectation damages are forward looking. What would the situation have
been like if contract had been fully performed. Most frequent type of damages.
· Reliance interest - promisee's interest in being reimbursed for loss caused by
reliance on the contract by being put in as good a position as he would have been
in had the contract not been made
○ received here - the difference between what she has and what she’d have
had if she’d not had the surgery, and kept her average nose
○ Reliance damages - closely related to idea of promissory estoppel. Diff -
promissory estoppel when there is no contract. If there is a contract then get
reliance damages.
· Restitution interest - promisee's interest in having restored to him any benefit
that he has conferred on the other party.
○ not in this case - the difference between what she has and what she’d have
had if the surgery had improved her nose
○ what she suffered in a surgery that she never would have had if the first
surgeries had been as successful as promised
○ Restoring to non-breaching party whatever benefit they conferred on the
breaching party.
· Expectation damages are the standard remedy in American Law.

Notes

· You can contract for a damages cap. May not be enforceable if contract for
medical procedures.
○ May be unconscionable, against public policy
○ Why no damages cap in torts? - not pre-planned. Contracts - you can plan
for everything.
· Contract - specifies the damages; In tort it’s the reasonable person standard
· Contract - no punitive damages; in tort you have pain & suffering
○ Contract - compensate non-breaching party. Tort - punish tortfeaser
(deterrence)
· How would you measure the expectancy damages?
○ Maybe if she was entertainer for a living, affects her work. She did not
prove this.
○ What is the difference if the promise have been kept (what position she
would have been in) in contrast to what she got.
§ Third surgery
§ Out-of-pocket expenses ($622 - price of the services)
§ Damages flowing from breach of promise
□ Change of appearance for the worse
□ Effects of the new appearance on P's consciousness (and taken
into consideration P's profession)
○ How do you calculate the worsening of the appearance (the difference)?
§ Survey the jury, and courts decide if its appropriate
○ What's the problem in giving full expectation damages in medical suits?
§ Bad public policy -
□ doctors may practice defensive medicine
□ If ppl could get money for not getting what they expected,
doctors may raise their prices
§ Court doesn’t believe many doctors would make this type of promise.
Doctors know result of operations are not fully predictable.
□ This court doesn’t look at this, and awards expectation damages

· Section 344 - expectation damages