intention of following through on the contract at that point. Moreover, the contract was
still executory. Dirt had not commenced any sort of performance, and Builder had not
paid anything. As a result, Dirt would have the option of suing for breach of contract at
the time of breach. Because the contract was completely executory, Dirt would be
entitled to its lost expected profits. In this case, the total fee was expected to be
$1,500,000 and the expected cost was $1,300,000. As a result, the expected profits
would be $200,000. Thus, Dirt would be likely to win $200,000 if there are no applicable
defenses to enforcement.
Mitigating damages-defense
In order for a party to recover damages, they must be certain, causally related to the
breach, foreseeable, and unavoidable. Here, the damages are foreseeable and caused
by Builder's breach. Had Builder not breached, Dirt would have been paid, and non-
payment is a foreseeable consequence of breach. Moreover, the damages here are
certain--$200,000. We generally use expectation damages in contract law, which puts
the party in as good of a position as they would have been had the contract been
performed. Generally, the non-breaching party is required to mitigate damages, which
means that they must try to reduce damages as much as possible. In the context of
construction contracts that are anticipatorily repudiated, mitigating damages might
involve taking other work during the time in which the party was expecting to work for
the breaching party. Thus, Builder might claim that Dirt has failed to mitigate damages.
However, the fact that Builder made Dirt refrain from entering into any other contracts
during this time might hurt the mitigation argument -- Dirt would probably be able to
show that it was unable to mitigate due to this clause in the contract. Had the clause
not been present, perhaps Dirt would have been out finding other business.
Anticipatory Repudiation by Dirt-defense
The issue is whether Builder might be able to defend on the basis that Dirt actually
repudiated first. However, this argument is likely to fail. On June 2, Dirt merely told
Builder about the ban and asked Builder to shoulder the increased expenses, after