Essential Supplements for Success in 1L Contracts:
1L Law School Contracts outline based on the following books:
JETZ SERVICE appellee v. SALINA PROPERTIES appellant
Ct of Appeals Kansas
Facts
Jets operates laundry machines in 2,000 locations
Apartment complex leased space to Jetz for coin laundry in May 1987 for six years
In july 1992 with 16 months left in lease Apartment broke K and put in their own laundry
January 1993 Jetz re-leases 4 of the 5 sets of laundry machines in Kansas
Procedural History
Salinas County awarded lost profit damages to Jetz for “lost volume”
Jetz received 6,383.08 and 2,165 in lawyer fees. One month of rent was deducted from award.
Salinas Property Appeals
They claim that Jetz failed to mitigate damages, and failed to prove requisite elements to recover lost profits
Apartment then claimed award should be reduced for maintenance and insurance costs, however fixed expenses and overhead are not deducted when computing lost profits
Appellate court upholds lower courts decision
Holding
Appellate court agrees with trial court categorizing Jetz as a “lost volume” lessee, because Jetz could have supplied laundry to both Kansas locations and therefore lost profits on one K
Affirmed
Rule
Jetz would have been able to enter into both laundry contracts, when the Apartment Complex breached Jetz therefore “lost volume” on that contract
Fixed expenses and overhead are not deducted when computing lost profits
Notes
UCC has several different Articles. Art. 2 is specific to sales of goods
- Goods are moveable products; cars, bananas, cookies
- UCC is law in 49 States, Louisiana did not adopt the law because they are based on more of a Civil Law system due to their dominant French history
UCC, as a statute, is binding law
• A restatement is not law, simply heavily weighted persuasive commentary
Jetz is “leasing” goods
• Technically not a “sale of goods” according to the UCC
– However the underlying UCC concept is analogous
The landlord admitted the breach in this case but disputes the damages due to lack of mitigation
Did Jetz mitigate the damages?
• Jetz had a substantial inventory, along with that inventory comes the capacity to enter both contracts simultaneously
• Jetz had REASONABLE CERTAINTY of lost profits due to the breach
Jetz ultimately still had a duty to mitigate, however mitigation is different in cases of lost volume
ie Jetz couldnt have left the washer out on the curb in the rain/tornadoe/ wicked witch of the west
The fundemental expectation puts the lost volume non-breacher in the same position as if K had been fully performed
Shirly MacClain, the actress, did not “loose volume” because she could only perform in one movie K at a time