Contracts II, Pages 1126–1128

Sackett v. Spindler

California Court of Appeal, 1967

Facts:

Plaintiff agreed to buy a majority of the shares of defendant's newspaper for $85,000. He made the first payment for $6,000 on time, the second for $20,000 a week late and $200 short, and the third payment of $59,000's check bounced. Plaintiff never paid, and defendant sold the stock to another buyer a year later for $20,680.

Procedural History:

Trial court determined that defendant take $34,575.74 on his cross-complaint by subtracting all of plaintiff's payments of $29,744.26 and the subsequent sale's proceeds of $20,680 from the contract's agreed price. This was because the trial court found that defendant "spent all reasonable efforts in minimizing damages to plaintiff," and that plaintiff caused the stock's price to drop by breaching the contract.

Issue:

Did defendant reasonably minimize the damage to plaintiff?

Cross-Defendant's Arguments:

  • Defendant did not reasonably minimize damage because he did not try to sell the newspaper when plaintiff breached.

  • To minimize damages, defendant was required to accept plaintiff's offer to pay after his assets were released from receivership in his divorce.

Rule:

LexisNexis IconWestLaw LogoGoogle Scholar LogoPage 1127, Paragraph 2

[A] party injured by a breach of contract is required to do everything reasonably possible to minimize his own loss and thus reduce the damages for which the other party has become liable. . . . a person who has been injured by a breach of contract cannot recover damages for detriment which he could have avoided by reasonable effort and without undue expense.

Reasoning:

  • Defendant tried to raise working capital by selling half his stock, and he cut costs by switching the newspaper from daily to weekly.

  • It would have been almost impossible for defendant to sell the newspaper after the news that the sale fell through was published. In addition, its value increased in the year after the breach, so waiting to sell actually reduced defendant's damages.

  • Plaintiff did not actually offer to pay at the time of his "offer", so accepting would not have reduced the damages any.

Holding:

Defendant acted reasonably in minimizing damages. Full damages awarded.

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