Procedural Posture

Appellant buyer sought review of a judgment of the Superior Court of Alameda County (California), which awarded respondent vendor damages arising from the buyer’s breach of a contract between the parties for linen supply service.

California Business Lawyer & Corporate Lawyer, Inc. understands CACI 420

Overview

The buyer agreed to a three-year contract for linen supply services that provided for a guaranteed weekly minimum service. The buyer canceled the service, and the vendor sued for damages. The trial court calculated damages by subtracting the expenses that would have been incurred in performing the contract from the minimum service amount. The buyer contended that the damages were excessive because the trial court should have also subtracted the vendor’s fixed overhead. The court affirmed the judgment. The court determined that the vendor’s breach of contract damages were the benefit the vendor would have obtained had the contract been performed, or, in other words, the vendor’s profits less the cost of the service. Because the vendor would have incurred overhead costs regardless of the contract, the court concluded that the cost of the service did not include overhead, and the damage award was correct.

Outcome

The court affirmed the damages awarded to the vendor for the buyer’s breach of a linen supply service contract.

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