In our last blog post about contract law, we wrote about breaches of contract in Kansas, reviewing the five elements a plaintiff must prove to win its case. Prior thereto, we wrote about interpreting written contracts in Kansas, discussing the importance of the parties’ intent and the legal concept of ambiguity. We hereby continue with our contract law series, this time delving into damages, a concept that could not be more important or cause greater worry to a party on either side of a breach.
As the reader may recall from our last post about contract law, one of the five elements a plaintiff must prove to win its breach of contract case is damages. This is phrased as “damages to the plaintiff caused by the breach.” We then posed the question, “What sort of damages have to be present, and in what amount, in order to satisfy the fifth required element of the claim?” but did not provide an answer therefor, indicating that one might be provided in a future blog post. Hereinbelow we follow through with our earlier aspiration, but we caution that this is not intended to be an exhaustive analysis of contract damages law in Kansas, just as our blog posts in general are not intended to comprehensively cover a subject or serve as legal advice.
The rule in Kansas is that “damages recoverable for breach of contract are limited to those damages which may fairly be considered as arising, in the usual course of things, from the breach itself, or as may reasonably be assumed to have been within the contemplation of both parties as the probable result of the breach.” Kansas State Bank v. Overseas Motosport, Inc., 222 Kan. 26, 27, 563 P.2d 414, 415 (Kan. 1977) (citing Cain v. Grosshans & Petersen, Inc., 196 Kan. 497, 501, 413 P.2d 98 (1966)) (emphasis added).
To state this well-established rule differently, there is no justification for charging a defendant with losses which the plaintiff claimed to have suffered if the defendant would not have contemplated damage of that kind as naturally flowing from a breach of the contract. The Restatement (Second) of Contracts § 351 (1979) states, in relevant part, the rule succinctly: “Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.” MLK, Inc. v. Univ. of Kansas, 23 Kan. App. 2d 876, 886, 940 P.2d 1158, 1164 (Kan. Ct. App. 1997). Foreseeability or foreseeable consequences, therefore, become paramount in determining, or perhaps limiting, damages in a breach of contract dispute.
Damages or losses as a consequence of a breach may or may not be made explicitly foreseeable within the four corners of a written instrument. As economic and societal damages surrounding the novel coronavirus disease (COVID-19) are mounting, attention to the explicit terms and conditions contained within contracts, including how they address damages, would be worthwhile.
Here at Kincaid Business & Entrepreneurial Law, LLC ®, we routinely work with clients on contract law matters. Some of the capabilities we have are determining whether a breach of contract has occurred, defending a party accused of a breach, negotiating settlements, and prosecuting claims inside or outside of court. Please contact us at 913-735-7707 or schedule with us here if we might be of service to you or your business.
Matthew T. Kincaid