Episode 26: Limitations on Money Damages
Organized: The Business Law Breakdown · Seth C. Oranburg
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Show Notes
This lecture explains the common law doctrines that limit how much money a court will award for breach of contract. Foreseeability asks whether the loss was within the parties’ contemplation at the time of agreement. Certainty asks whether the plaintiff can prove the amount with sufficient precision. Mitigation asks whether the injured party could have avoided the harm through reasonable efforts. Together, these doctrines draw the boundary of expectation damages.
The video walks through Hadley v. Baxendale, Restatement (Second) § 351, § 352, and UCC §§ 2-715, 2-712, and 2-718. It uses concrete examples involving airplane parts, startup ride-sharing scooters, bottling delays, and brewery supply chains to illustrate how courts analyze direct and consequential damages. The discussion closes with a framework for drafting enforceable liquidated-damages clauses, including the two-prong reasonableness test and how such clauses interact with other limitations doctrines.