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New York Court of Appeals - 67 N.Y.2d 257
tl;dr:
Plaintiff entered into a contract with Defendant county to build a multipurpose sports dome. Then Defendant refused to build the dome.Video Summary
Case Summary
In the 1986 case, Kenford Co. v. County of Erie, the New York Court of Appeals tackled the issue of damages for a contract breach. The situation involved a county that didn't build a promised stadium, despite a company donating land for it and agreeing to manage it. The company, which also owned land near the proposed site, expected its value to increase because of the stadium. When the county canceled the project, the company sued for the lost potential land value increase.
The Court of Appeals ruled that the company couldn't recover damages for the expected appreciation in land value since it wasn’t part of the original agreement between the parties. The court used a "reasonable foreseeability" test, requiring a higher probability level than in tort law, stating that the county never agreed to take on the risk of lost land value. Instead, the company solely assumed this risk.
This case is significant because it clarified and applied contract breach damages principles, differentiating them from tort law principles. It revealed how courts take into account the parties' knowledge and expectations while determining if a loss was foreseeable. The case remains relevant and referenced today on this subject.
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The case involves a dispute over the recovery of loss of prospective profits in a breach of contract action for a 20-year operation of a domed stadium. The Appellate Division reversed portions of the verdict awarded to the plaintiffs, stating that expert opinion and statistical projections of future business operations were insufficient to support an award of lost profits. The Court of Appeals agreed that the damages must be certain and capable of proof with reasonable certainty, and not speculative or imaginary. Although DSI's procedure for computing damages was supported by recognized experts, it was still insufficient to meet the required standard for establishing loss of prospective profits with reasonable certainty.
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