California Civil Jury Instructions (CACI) (2017)

351. Special Damages

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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.
• “The detriment that is ‘likely to result therefrom’ is that which is foreseeable to
the breaching party at the time the contract is entered into.” (Wallis v. Farmers
Group, Inc. (1990) 220 Cal.App.3d 718, 737 [269 Cal.Rptr. 299], internal
citation omitted.)
• “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
• “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 (10th ed. 2005) Contracts, § 871
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]