California Civil Jury Instructions (CACI) (2017)

357. Seller's Damages for Breach of Contract to Purchase Real Property

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357.Seller’s Damages for Breach of Contract to Purchase Real
Property
To recover damages for the breach of a contract to buy real property,
[name of plaintiff] must prove:
1. The difference between the amount that was due to [name of
plaintiff] under the contract and the fair market value of the
property at the time of the breach; [and]
2. [Insert item(s) of claimed consequential damages, e.g., resale
expenses].
New September 2003
Directions for Use
Read this instruction in conjunction with CACI No. 350, Introduction to Contract
Damages. If there is a dispute regarding the appropriate rate of interest, 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”
Explained.
Sources and Authority
• Damages for Breach of Contract to Purchase Real Property. Civil Code section
3307.
“It is generally accepted that the equivalent of value to the seller is fair market
value. Fair market value is reckoned ‘in terms of money.’ ” (Abrams v. Motter
(1970) 3 Cal.App.3d 828, 840–841 [83 Cal.Rptr. 855], internal citations
omitted.)
• “The “value of the property” to [plaintiff] is to be determined as of the date of
the breach of the agreement by [defendant].” (Allen v. Enomoto (1964) 228
Cal.App.2d 798, 803 [39 Cal.Rptr. 815], internal citation omitted.)
• There can be no damages where the value to the owner equals or exceeds the
contract price. (Newhart v. Pierce (1967) 254 Cal.App.2d 783, 792 [62 Cal.Rptr.
553], internal citation omitted.)
• “[T]he view that this section is exclusive, and precludes other consequential
damages occasioned by the breach, was rejected in Royer v. Carter. Under Civil
Code, section 3300, other damages are recoverable, usually embracing the out-
of-pocket expenses lost by failure of the transaction.” (Wade v. Lake County
Title Co. (1970) 6 Cal.App.3d 824, 830 [86 Cal.Rptr. 182], internal citation
omitted.)
• “[C]ourts have permitted consequential damages, only where the seller has
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diligently attempted resale after the buyer has breached the contract.” (Askari v.
R & R Land Co. (1986) 179 Cal.App.3d 1101, 1107 [225 Cal.Rptr. 285],
internal citation omitted.)
• “[I]f the property increases in value before trial and the vendor resells the
property at a price higher than the value of the contract, there are no longer any
loss of bargain damages.” (Spurgeon v. Drumheller (1985) 174 Cal.App.3d 659,
664 [220 Cal.Rptr. 195].)
• “The same rule of no loss of bargain damages to the vendor applies where the
resale is for the same price as the contract price.” (Spurgeon, supra, 174
Cal.App.3d at p. 664, internal citations omitted.)
• “For the reason that no loss of bargain damages are available to a seller if there
is a resale at the same or a higher price than the contract price, the law imposes
on the seller of the property the duty to exercise diligence and to make a resale
within the shortest time possible. In discussing the duty to mitigate where the
vendee seeks return of a deposit, the Sutter court states the requirement that
resales be made with reasonable diligence ‘states a policy applicable to resales
of real property. Whether the resale is made one, two or three months later, or
whether it be a year or more, it should be made with reasonable diligence to
qualify the vendor to an allowance of an off-set against the vendee’s claim for
restitution of money paid.’ ” (Spurgeon, supra, 174 Cal.App.3d at p. 665,
internal citations omitted.)
• “Although it is well settled in the foregoing authorities that damages under
Civil Code section 3307 for the difference between the contract price and
property value may be insufficient to give the vendor the benefit of his bargain
and he is entitled also to resale expenses and some costs of continued
ownership, he should not be permitted to receive a windfall at the purchaser’s
expense.” (Smith v. Mady (1983) 146 Cal.App.3d 129, 133 [194 Cal.Rptr. 42].)
• “Inasmuch as under Abrams and Sutter the vendor has an obligation to resell
promptly in order to obtain consequential damages and the resale price may fix
the property value as a basis for Civil Code section 3307 damages, we are
impelled to conclude that there is no inherent separateness in the original sale
and subsequent resale transactions. The increased resale price should not be
disregarded in considering an offset to consequential damages awarded to a
vendor against a defaulting purchaser of real property.” (Smith, supra, 146
Cal.App.3d at p. 133.)
• “The owner of real or personal property may competently testify to its value.”
(Newhart, supra, 254 Cal.App.2d at p. 789, internal citations omitted.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2005) Contracts, §§ 901–906
California Real Property Remedies Practice (Cont.Ed.Bar 1980; 1999 supp.),
Breach of Seller-Buyer Agreements, §§ 4.37–4.43
California Practice Guide: Real Property Transactions (The Rutter Group 2000),
CACI No. 357 CONTRACTS
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11-C, § C., Seller’s Remedies Upon Buyer’s Breach—Damages and Specific
Performance
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
CONTRACTS CACI No. 357
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