CACI No. 351. Special Damages

Judicial Council of California Civil Jury Instructions (2023 edition)

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351.Special Damages
[Name of plaintiff] [also] claims damages for [identify special damages].
To recover for this harm, [name of plaintiff] must prove that when the
parties made the contract, [name of defendant] knew or reasonably should
have known of the special circumstances leading to the harm.
New September 2003
Directions for Use
Before giving this instruction, the judge should determine whether a particular item
of damage qualifies as “special.”
Sources and Authority
Measure of Contract Damages. Civil Code section 3300.
‘Unlike general damages, special damages are those losses that do not arise
directly and inevitably from any similar breach of any similar agreement.
Instead, they are secondary or derivative losses arising from circumstances that
are particular to the contract or to the parties. Special damages are recoverable if
the special or particular circumstances from which they arise were actually
communicated to or known by the breaching party (a subjective test) or were
matters of which the breaching party should have been aware at the time of
contracting (an objective test). [Citations.] Special damages “will not be
presumed from the mere breach” but represent loss that ‘occurred by reason of
injuries following from’ the breach.’ (Schellinger Brothers v. Cotter (2016) 2
Cal.App.5th 984, 1010 [207 Cal.Rptr.3d 82].)
“Special damages must fall within the rule of Hadley v. Baxendale, . . . that is,
they must reasonably be supposed to have been contemplated or foreseeable by
the parties when making the contract as the probable result of a breach.”
(Sabraw v. Kaplan (1962) 211 Cal.App.2d 224, 227 [27 Cal.Rptr. 81], internal
citations omitted.)
“Parties may voluntarily assume the risk of liability for unusual losses, but to do
so they must be told, at the time the contract is made, of any special harm likely
to result from a breach [citations]. Alternatively, the nature of the contract or the
circumstances in which it is made may compel the inference that the defendant
should have contemplated the fact that such a loss would be ‘the probable result’
of the defendant’s breach. [Citation.] Not recoverable as special damages are
those ‘beyond the expectations of the parties.’ [Citation.] Special damages for
breach of contract are limited to losses that were either actually foreseen
[citation] or were ‘reasonably foreseeable’ when the contract was formed.” (Ash
v. North American Title Co. (2014) 223 Cal.App.4th 1258, 1269-1270 [168
Cal.Rptr.3d 499].)
“When reference is made to the terms of the contract alone, there is ordinarily
little difficulty in determining what damages arise from its breach in the usual
course of things, and the parties will be presumed to have contemplated such
damages only. But where it is claimed the circumstances show that a special
purpose was intended to be accomplished by one of the parties (a failure to
accomplish which by means of the contract would cause him greater damage
than would ordinarily follow from a breach by the other party), and such
purpose was known to the other party, the facts showing the special purpose and
the knowledge of the other party must be averred. This rule has frequently been
applied to the breach of a contract for the sale of goods to be delivered at a
certain time. In such cases the general rule of damages is fixed by reference to
the market value of the goods at the time they were to have been delivered,
because in the usual course of events the purchaser could have supplied himself
with like commodities at the market price. And if special circumstances existed
entitling the purchaser to greater damages for the defeat of a special purpose
known to the contracting parties (as, for example, if the purchaser had already
contracted to furnish the goods at a profit, and they could not be obtained in the
market), such circumstances must be stated in the declaration with the facts
which, under the circumstances, enhanced the injury.” (Mitchell v. Clarke (1886)
71 Cal. 163, 164-165 [11 P. 882], internal citation omitted.)
“[I]f special circumstances caused some unusual injury, special damages are not
recoverable therefor unless the circumstances were known or should have been
known to the breaching party at the time he entered into the contract. The
requirement of knowledge or notice as a prerequisite to the recovery of special
damages is based on the theory that a party does not and cannot assume limitless
responsibility for all consequences of a breach, and that at the time of
contracting he must be advised of the facts concerning special harm which might
result therefrom, in order that he may determine whether or not to accept the
risk of contracting.” (Brandon & Tibbs v. George Kevorkian Accountancy Corp.
(1990) 226 Cal.App.3d 442, 455 [277 Cal.Rptr. 40], internal citations omitted.)
“Contract damages must be clearly ascertainable in both nature and origin. A
contracting party cannot be required to assume limitless responsibility for all
consequences of a breach and must be advised of any special harm that might
result in order to determine whether or not to accept the risk of contracting.”
(Erlich v. Menezes (1999) 21 Cal.4th 543, 560 [87 Cal.Rptr.2d 886, 981 P.2d
978], internal citations omitted.)
‘[F]oreseeability is to be determined as of the time of the making of the
contract’; ‘what must be foreseeable is only that the loss would result if the
breach occurred’; ‘it is foreseeability only by the party in breach that is
determinative’; ‘foreseeability has an objective character’; and ‘the loss need
only have been foreseeable as a probable, as opposed to a necessary or certain,
result of the breach.’ (Ash, supra, 223 Cal.App.4th at p. 1270.)
Secondary Sources
1 Witkin, Summary of California Law (11th ed. 2017) Contracts, § 896
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.13
(Matthew Bender)
6 California Points and Authorities, Ch. 65, Damages: Contract, § 65.61 et seq.
(Matthew Bender)
1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or
Opposing Damages in Contract Actions, 7.04[6], 7.08[3]

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