Tuesday, July 22, 2008

real property - sales agreement - breach - consequential damages

Quinn v. Bupp - Superior Court - June 21, 2008


Seller breached sales agreement concerning commercial property. The trial court ordered specific performance, but both parties appealed concerning consequential damages. The appellate court held that

1) increased cost of borrowing - Buyer could not recover increased borrowing costs due to increase in mortgage interest. Following the rule in Rusiski v. Pribonic, 515 A.2d 507 (Pa. 1986), the court held that "under contract principles, damages must be such as would naturally and ordinarily follow from the breach, must have been reasonably foreseeable and within the contemplation of the parties at the time they made the contract and must be capable of being proved with reasonable certainty. Changes in interest rates, while foreseeable, are not capable of being proven with reasonable certainty. Drastic fluctuations in interest rates over the recent past render it speculative for a court to award interest as damages in specific performance decrees.

2) lost profits - Buyer could recover the profits he lost because of the breach, since they were foreseeable, ascertainable, and readily calculable. They would have been paid to the buyer if the seller had not wrongfully refused to comply with the sales agreement