A doctor, Defendant McGee, operated on Plaintiff Hawkins’ hand and performed a skin graft. P had sustained the hand injury nine years prior to the operation in an accident which had no relation to D. D spoke the words, “I will guarantee to make the hand a hundred per cent perfect hand or a hundred per cent good hand.” D repeatedly solicited P’s father and P and D may even have stated that he wanted an opportunity to “experiment on skin grafting.” P and his father consented to the operation. After the operation, P was left with a hand that was arguably in worse condition than prior to the surgery. P claimed the damage was the fault of D and P contends this was a contract and a warranty.
P sued D in a N.H. court for assumpsit (breach of contract). A jury trial ensued. The jury found that D and P had made a contract and ruled in P’s favor. The jury was also instructed by the trial court that it could consider pain and suffering due to the operation and positive ill effects of the operation upon P’s hand. The jury awarded $3,000 to P. D appealed and the case was heard in N.H. Supreme Court, where damages were ruled excessive. P was ordered to return all but $500, and he refused, so the verdict was overturned. The finding of breach of warranty stood.
How are damages calculated in a breach of contract? In this case, the difference “between the value to [Hawkins] of a perfect hand such as the jury found the defendant promised him, and the value of his hand in its present condition…” Did the lower court follow this rule correctly? Did the lower court properly instruct the jury regarding the determination of whether or not a contract existed?
Damages in a breach of contract case are either reliance or expectation, and may be measured by determining the difference between P’s actual position and the position he would have been in had the contract not been breached. Also, the nature of a contract is reiterated in this case by the court’s comparison of different utterances and actions on D’s part which do not constitute a contract, and the facts surrounding his statement, “I guarantee to make the hand 100 per cent good,” which the court found was a breach of warranty. Damages could only be considered for D’s failure to improve the condition of the hand (the position P would have been in had the contract not been breached), not for any worsening of the condition of the hand. Rules pertaining to this matter can be found in Restatement Sections 2 and 4.
The Holding / Disposition
The N. H. Supreme Court held that the lower court’s instructions regarding damages were incorrect, and found that the evidence presented would have justified a verdict for an amount sufficient to cover the cost of a new operation to correct the injury to the hand. The court found that the question of whether a contract existed was properly submitted to the jury. Overturned and sent down for retrial.
The N. H. Supreme Court restated the rule for damages in a contract breach. More specifically, the measure is the difference between the value of the contract as carried out and the value of the contract as broken, following the rules for expectation damages. There is still debate about the allowance for pain and suffering (tort) in the expectation damages calculated in this case, with some believing that it should not have been allowed, or not allowed to the extent that it was. The court clearly differentiated between what components it found to be a warranty and the opinion and predictions which did not constitute a contract. The court applied the reasonability test of the objective theory of contracts fairly.