AMI 2442 Damages—General Rule

Complete this instruction with the measure(s) of damage permitted by law or the measure agreed upon by the parties in their contract. If the proper measure of direct damages includes lost profits, see AMI 2206.

Use only this instruction when no consequential damages are alleged. If consequential damages, including lost profits as an element of consequential damages, are appropriate, use this instruction and also use AMI 2443.

If nominal damages are alleged, refer to AMI 419 and modify that instruction for use in a contract case.

Do not use the bracketed second sentence in the first paragraph of the instruction if the only element of damages is liquidated damages. If liquidated damages are determined as a matter of law, do not use this instruction.

This instruction is designed to be used both for claims of breach of contract and promissory estoppel that may be submitted to a jury. If this instruction is used with a claim of promissory estoppel, the word “promise” should be used in place of “contract”.

If there is evidence that the party claiming damages has failed to mitigate damages, see AMI 2230.

“The underlying purpose in awarding damages for breach of contract is to place the injured party in as good [of a] position as he would have been had the contract been performed.” Bowman v. McFarlin, 1 Ark. App. 235, 239, 615 S.W.2d 383, 385 (1981); (measure of damages in a construction contract). See also Rebsamen Cos., Inc. v. Ark. State Hosp. Emps. Fed. Credit Union, 258 Ark. 160, 162–63, 522 S.W.2d 845, 847 (1975) (vehicle sales contract).

“Damages must arise from the wrongful acts of the breaching party.” Spann v. Lovett & Co., 2012 Ark. App. 107, at 16, 389 S.W.3d 77, 91; Dawson v. Temps Plus, Inc., 337 Ark. 247, 258, 987 S.W.2d 722, 728 (1999). “The injured party is limited to damages based on his actual loss caused by the breach.” Restatement (Second) of Contracts § 347 cmt. e (1981). See also Bank of Am., N.A. v. C.D. Smith Motor Co., 353 Ark. 228, 245–47, 106 S.W.3d 425, 434–35 (2003) (repeating the “arise from” requirement in Dawson but also referring to testimony that the breach most likely “caused” the plaintiff's damages). Causation of damages is included in this damage instruction, rather than the issue instruction for breach of contract, because a plaintiff is entitled to recover nominal damages in the absence of proof of actual damages. See AMI 2401, cmt.; Crumpacker v. Gary Reed Constr., Inc., 2010 Ark. App. 179, at 3, 374 S.W.3d 162 (“[P]roof of causation is not an element of a claim for breach of contract or breach of implied warranty of habitability”).

Model instructions from several other states use the term “resulting from,” or a variation thereof, as the element of causation of damages in contract cases. See Colo. Jury Instructions, 4th—Civil 30.37 (requiring a finding of actual damages “as a result of” the breach); Ill. Pattern Jury Instructions—Civil 700.02V (2008 ed.) (requiring plaintiff to prove it sustained damage “resulting from” defendant's breach); N.Y. Pattern Jury Instructions—Civil 4:20, cmt. (final element of cause of action for breach of contract is “resulting damage”); Tex. Pattern Jury Charges—Bus., Consumer, Ins. & Employment 110.2 (2006 ed.) (charging the jury to determine the damages, if any, that “resulted from” a failure to comply with the contract). In Crumpacker, the court held that a plaintiff seeking actual damages should prove the monetary damages sustained “as a result of” the defendant's breach. 2010 Ark. App., 179 at 4–5, 374 S.W.3d 162, 164. The Arkansas courts also use the term “resulting from” to describe causation in the doctrine of avoidable consequences, i.e., mitigation of damages. See Bill C. Harris Constr. Co. v. Powers, 262 Ark. 96, 104–05, 554 S.W.2d 332, 336 (1977) (stating that under the doctrine, in both contract and tort cases, the plaintiff cannot recover damages “resulting from” consequences which he could reasonably avoid); Beardsley v. Pennino, 19 Ark. App. 123, 127, 717 S.W.2d 825, 827 (1986) (holding in a contract case that the appellant's alleged “set-off” “is not a recovery for damages resulting from consequences that appellee reasonably could have avoided”).

The proper measure of damages will depend upon the nature of the contract claim in each case. For example, depending upon the nature of his claim, the plaintiff may seek damages based either upon his expectancy or his reliance. See generally Howard W. Brill, Law of Damages § 17:1 (5th ed. 2004). However, case law provides specific measures of damage for the breach of certain contracts. See, e.g., Johnston v. Curtis, 70 Ark. App. 195, 204, 16 S.W.3d 283, 289 (2000) (measure of damages for vendee's breach of executory contract for sale of land is difference between contract price and market value at time of breach, less portion of purchase price already paid).

In situations involving less than full performance, the measure of damages also varies depending upon the type of claim. Among the various measures of damages for such claims are the following:

If the parties' contract provides for mandatory liquidated damages, the amount of the liquidated damages should be inserted as the sole element of damages. See McMaster v. McIlroy Bank, 9 Ark. App. 124, 128, 654 S.W.2d 591, 594 (1983). However, if the liquidated damage provision in the contract is not mandatory, the plaintiff has the option of seeking actual damages or liquidated damages. Id., 654 S.W.2d at 594. For a general discussion of the enforceability of liquidated damage provisions, see Johnson v. Jones, 33 Ark. App. 149, 152–53, 807 S.W.2d 39, 41–42 (1991).