California Civil Jury Instructions (CACI) (2017)

356. Buyer’s Damages for Breach of Contract for Sale of Real Property (Civ. Code, § 3306)

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356.Buyer’s Damages for Breach of Contract for Sale of Real
Property (Civ. Code, § 3306)
To recover damages for the breach of a contract to sell real property,
[name of plaintiff] must prove:
1. The difference between the fair market value of the property on
the date of the breach and the contract price;
2. The amount of any payment made by [name of plaintiff] toward
the purchase;
3. The amount of any reasonable expenses for examining title and
preparing documents for the sale;
4. The amount of any reasonable expenses in preparing to occupy
the property; and
5. [Insert item(s) of claimed consequential damages].
New September 2003
Directions for Use
Read this instruction in conjunction with CACI No. 350, Introduction to Contract
Damages. If the appropriate rate of interest is in dispute, the jury should be
instructed to determine the rate. Otherwise, the judge should calculate the interest
and add the appropriate amount of interest to the verdict.
For a definition of “fair market value,” see CACI No. 3501, “Fair Market Value”
Sources and Authority
• Damages for Breach of Contract to Convey Real Property. Civil Code section
Interest on Contract Damages. Civil Code section 3289.
• “ ‘The rules of damages for a breach of a contract to sell or buy real property
are special and unique. To the extent that the measure of compensatory damages
available to a buyer or seller of real property for a breach of a contract are
different from the general measure of compensatory damages for a breach of
contract, the special provisions for damages for a breach of a real property sales
contract prevail.’ ” (Greenwich S.F., LLC v. Wong (2010) 190 Cal.App.4th 739,
751 [118 Cal.Rptr.3d 531].)
• “A simple reading of the statute discloses that by its explicit terms it is
adaptable only to a failure to convey, and not to a delay in conveying.”
(Christensen v. Slawter (1959) 173 Cal.App.2d 325, 330 [343 P.2d 341].)
• “This court itself has recently described section 3306 as providing for ‘loss-of-
bargain damages’ measured by the difference between the contract price and the
fair market value on the date of the breach.” (Reese v. Wong (2001) 93
Cal.App.4th 51, 56 [112 Cal.Rptr.2d 669], internal citation omitted.)
• “It is settled that when a seller of real property fails or refuses to convey, a
buyer who has made advance payments toward the purchase price may recover
interest on those payments as damages for breach of contract. This rule is not
limited to sales of real property; it applies to sales in general.” (Al-Husry v.
Nilsen Farms Mini-Market, Inc. (1994) 25 Cal.App.4th 641, 648 [31
Cal.Rptr.2d 28], internal citations omitted.)
• Section 3306 does not ordinarily apply to breach of an unexercised option to
buy property. (Schmidt v. Beckelman (1960) 187 Cal.App.2d 462, 470–471 [9
Cal.Rptr. 736].)
• “ ‘Generally, [consequential] damages are those which, in view of all facts
known by the parties at the time of the making of the contract, may reasonably
be supposed to have been considered as a likely consequence of a breach in the
ordinary course of events. This provision would conform the measure of
damages in real property conveyance breaches to the general contract measure
of damages which is specified in Civil Code 3300: “. . . all the detriment
proximately caused (by the breach), or which, in the ordinary course of things,
would be likely to result therefrom.” ’ ” (Stevens Group Fund IV v. Sobrato
Development Co. (1991) 1 Cal.App.4th 886, 892 [2 Cal.Rptr.2d 460], quoting
the Assembly Committee on Judiciary.)
• “Moreover, in none of the foregoing cases does it appear that the buyer
demonstrated the existence of the other requisites for an award of consequential
or special damages, i.e., that the seller knew of the buyer’s purpose in
purchasing the property and that the anticipated profits were proved with
reasonable certainty as to their occurrence and amount.” (Greenwich S.F., LLC,
supra, 190 Cal.App.4th at p. 757.)
• “The plain language of section 3306, adding consequential damages to the
general damages and other specified damages recoverable for breach of a
contract to convey real property, the legislative history of the 1983 amendment
acknowledging that the addition of consequential damages would conform the
measure of damages to the general contract measure of damages, and the
generally accepted inclusion of lost profits as a component of consequential or
special damages in other breach of contract contexts and by other states in the
context of breach of contracts to convey real property, taken together, persuade
us that lost profits may be awarded as part of consequential damages under
section 3306 upon a proper showing.” (Greenwich S.F., LLC, supra, 190
Cal.App.4th at p. 758, internal citations omitted.)
• “Rents received from the lease of the property in this case are not properly an
item of consequential damages. Here, plaintiff introduced evidence as to the fair
market value of the property which included these profits. To allow these as
consequential damages under these circumstances would have permitted a
double recovery for plaintiff.” (Stevens Group Fund IV, supra, 1 Cal.App.4th at
p. 892.)
• “The phrase ‘to enter upon the land’ refers to the taking of possession rather
than to things done to put the land to general use.” (Crag Lumber Co. v.
Crofoot (1956) 144 Cal.App.2d 755, 779 [301 P.2d 952].)
• “We think the phrase ‘and interest’ should continue to be read as referring to
the generally applicable provisions of [Civil Code] section 3287 regarding
prejudgment interest. As amended in 1967, subdivision (a) of section 3287
establishes a right to recover prejudgment interest on damages ‘capable of being
made certain by calculation’ and subdivision (b) gives the court general
discretionary authority to award prejudgment interest where damages are ‘based
upon a cause of action in contract . . . .’ The discretionary authority conferred
by subdivision (b) will ordinarily apply to loss-of-bargain damages measured by
the contract price/market value differential.” (Rifkin v. Achermann (1996) 43
Cal.App.4th 391, 397 [50 Cal.Rptr.2d 661].)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 898–900
California Real Property Remedies Practice (Cont.Ed.Bar 1980; 1999 supp.) Breach
of Seller-Buyer Agreements, §§ 4.11–4.14
Greenwald & Asimow, California Practice Guide: Real Property Transactions, Ch.
11-D, Buyer’s Remedies Upon Seller’s Breach—Damages And Specific
Performance, ¶ 11:184 (The Rutter Group)
50 California Forms of Pleading and Practice, Ch. 569, Vendor and Purchaser,
§ 569.22 (Matthew Bender)
9 California Legal Forms, Ch. 23, Real Property Sales Agreements, § 23.12 et seq.
(Matthew Bender)
1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or
Opposing Damages in Contract Actions, 7.04[7][f]
1 Matthew Bender Practice Guide: California Contract Litigation, Ch. 8, Seeking or
Opposing Equitable Remedies in Contract Actions, 8.37, 8.58