Where P contracts to build a house for D, and after P has partially performed the contract, D notifies him to stop working, thereby breaching the contract, P’s recovery in an action for the breach is limited to the amount of damages he can prove with reasonable certainty. The items comprising his damages are the expenses incurred up to the time of the breach, plus the expected profits on the total contract. This is the normal rule in contracts cases.
However, where P is a correspondence school, and D a person who has contracted to pay for correspondence courses and who subsequently tells P to stop performance, this normal damages rule is only one of three followed in the various state courts. The “Michigan rule” places the burden of proving damages, which includes expenses incurred plus expected profit, on the plaintiff. The “Nebraska rule” purports to allow the plaintiff-correspondence school, as damages, the contract price less the amount which it saves by virtue of not having to perform the remainder of the contract; but places the burden of proving these “cost savings” on the defendant-student. The third rule is the “Massachusetts rule” which allows plaintiff to recover the entire contract price in all cases on the theory that the defendant’s promise is an independent covenant.
Donn E. Davis,
Contracts — Damages — Burden of Proof on Elements of Damage in Actions for Breach of a Correspondence School Contract,
33 Neb. L. Rev. 80
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