Current Legal Issues

What Are the Damages for Breach of Contract?

Florida law can be traced to an English case back in 1845. Back then the amount a person could recover in a law suit was the amount that the parties to a contract had negotiated. 

That formula did not work well for product liability.  If the wheel of an automobile came off and killed a pedestrian while the automobile was being operated by the purchaser, the warranty might cover the expenses incurred by the buyer, but what about the person who was killed by the tire?  And what if the automobile was being used for hire and during the time that the automobile was out of service the owner lost income?

Assuming that the owner of the car is sued for damages as a result of the death of the pedestrian, should the owner be entitled to additional money from the automobile manufacturer, or dealer who sold the defective car, in an amount equal to the amount recovered by the estate of the deceased pedestrian against the owner of the car?  Should the estate of the pedestrian be entitled to sue the automobile manufacturer and automobile dealer to recover damages for loss of life and support? These are the kinds of questions that are asked when a case includes a breach of contract, or warranty, and a claim of negligence. 

In 1987 the Florida Supreme Court held that when a defective product damages only itself than the reason to impose liability beyond that negotiated by the parties to the contract are weak.  In 2004 the high court in Florida limited the application of the economic loss rule to situations where the parties have negotiated remedies in a contract, or when a defective product damages itself but does not harm a person or damage other property. 

In the above example the defective product was the automobile and not only did the automobile sustain damage when the wheel left the axel but the defect resulted in economic loss of income to the owner, and caused the death of a pedestrian. In 1987 the economic loss rule would have limited contract damages to those negotiated between the auto manufacturer or dealer and the automobile buyer; however, in 2013 the law changed and would now allow recovery; that is, the buyer could recover by proving that the product was defective, that the manufacturer owed a duty of care, that the defect caused injury, and that the injury or damage was foreseeable. 

In contract law a party must be restored to his contractual expectation, but in negligence law, often referred to as “tort law”, the object is to make the injured party “whole”, which is to say restore his economic status to what it would have been had his loss not occurred. Since the measure of damages is not the same the court must distinguish between a contract claim and a tort claim, but complex economic relationships may make the distinction difficult to ascertain.