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Corbin on Contracts

Copyright 2007, Matthew Bender & Company, Inc., a member of the LexisNexis Group.

PART I FORMATION OF CONTRACTS

TOPIC A OFFER AND ACCEPTANCE

CHAPTER 2 OFFERS; CREATION AND DURATION OF POWER OF ACCEPTANCE

1-2 Corbin on Contracts § 2.25

§ 2.25 Effect of the Rule Against Enhancement of Damages

There seems to be only one case in which the foregoing analysis is not followed-only one case in which the offeror can destroy the power of acceptance even where that power is created by a binding option contract. Suppose the following case: A wishes to induce B to destroy a valuable but unsightly building. B wishes to have thirty days in which to consider the matter and to have during that period an irrevocable option to earn the promised compensation. Thereupon, in return for ten dollars paid, A promises to pay $50,000 to B in return for B's demolishing within thirty days of the building that obstructs A's view. If in this case A gives notice of repudiation, B's power of acceptance (or of creating new contractual relations by fulfillment of the condition) is destroyed. The act of acceptance is here a very expensive one and would greatly increase the loss. B cannot maintain an action of debt for $50,000, for the destruction of the building was the quid pro quo and its fulfillment would not be justifiable. B's remedy is in assumpsit for damages, being $50,000, less the value of the building saved. The option contract is legally enforceable by this remedy; but the specified act of acceptance (destruction of the building) would not make a new remedy available or affect the legal relations of the parties at all. B's power of acceptance is gone.

Even in a case of this sort, if A has promised to convey Blackacre, instead of to pay money, and the breach of A's promise is regarded as about to cause B irreparable injury, equity might well approve the destruction of the building and would decree specific performance of A's promise. In such a case, A's offer is clearly irrevocable, in the strictest meaning of that term.

The doctrine that is here applied is one that is applicable to all contracts alike. After a repudiation or other breach by one party, the other's damages are limited to compensation for such resulting harm as cannot be avoided by reasonable effort.n1 Having been warned not to continue performance, the aggrieved party cannot thereafter increase the recovery of damages by making expenditures that are not necessary to avoid still greater loss.

Legal Topics:

For related research and practice materials, see the following legal topics:

Contracts LawRemediesAvoidable Consequences

FOOTNOTES:

(n1)Footnote 1.

Mo. - American Publishing & Engraving Co. v. Walker, 87 Mo.App. 503 (1901) .

N.Y. - Clark v. Marsiglia, 1 Den. 317 (N.Y.1845) . See, further, the sections dealing with Avoidable Consequences in Chapter 57.