Compensatory Damages - Consequential Damages: Foreseeability; Mitigation;

Certainty, Incidental Reliance

Case: Spang Industries, Inc., Fort Pitt Bridge Division v. Aetna Casualty &
Surety Co. (1975, 2nd) [pp. 950-959]

Facts: K for Fort Pitt to deliver steel to Torrington by a delivery date to be

"mutually agreed upon." Torrington had contracted with NYS for a highway
reconstruction, and needed the steel for that purpose. Fort Pitt then promised
that the steel would be shipped early in August, 1970. Fort Pitt begin shipping
the steel Aug 21, 1970, but not enough for Torrington to commence work until Sept
16, 1970. Due to the delays, Torrington incurred additional costs. Lower court
held that Fort Pitt was liable for $7,653.57 in damages for costs incurred by
Torrington. Fort Pitt appeals the damages awarded.
○ Fort Pitt's argument: increased expenses constitute special damages which
were not reasonably within the contemplation of the parties when they entered into
the contact.
§ Torrington K with govt indicated that total work was to be completed
by Dec 1971. It could not have been reasonably anticipated that they would
expedite the work by a year.
§ Additionally, the knowledge Fort Pitt rec'd after K formation cannot
expand its liability, b/c the rule says that notice of facts that give rise to
special damages have to be given at time of K.

Issue: Whether the consequential damages incurred by a subcontractor caused by

delays of supplier for shipment of materials were reasonably foreseeable, and in
contemplation of the parties when they entered into the K?- Yes.

Holding: Affirmed for Torrington.

Reasoning:
○ In contemplation of the parties when they entered into the K
§ K said delivery date was to be mutually agreed upon. Therefore the
knowledge of the consequences of a failure to perform is to be imputed to the
defaulting party as of the time the parties agreed upon the date of performance.
○ Reasonably foreseeable
§ Fort Pitt was experienced in this area. They knew or should have
known the process Torrington would go through, and therefore, the consequences of
breach. These are damages that must necessarily follow, and also that are likely
to follow.
○ Mitigation of damages
§ If Torrington would have delayed the work until the spring of 1971,
they would have incurred much higher costs. Therefore, they mitigated the damages
as best they could, and in good faith. This should also have been foreseen by Fort
Pitt.

RULE: When parties enter into a K which provides that the time of performance is
to be fixed at a later date, the knowledge of the consequences of a failure to
perform is to be imputed to the defaulting party as of the time the parties agreed
upon the date of performance.