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Bob wants to build a greenhouse and a garage on his land. He contracts Matt to build the greenhouse only as Matt does not specialize in building garages. They agree that Matt starts the job in 3 weeks.

A few days later Bob comes across John who is happy to build both the greenhouse and garage. Bob would prefer that both things are built by the same man, but he is now obliged to honor the contract with Matt, so he cannot give the greenhouse job to John unless Matt is happy to terminate the contract.

What kind of damages would be awarded to Matt by the court if Bob, instead of mutually terminating the contract, simply refuses to honor it and gets John to build the both things? Would that damage be comparable to the amount that Bob would have paid to Matt if the contract was honored, or much less?

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    Has Matt incurred any expenses or turned down other jobs as a result of relying on the contract he has with Bob? – brhans Apr 25 '18 at 11:30
  • @brhans Though Matt has not incurred any expenses he might have turned down a similar job around the planned time. – Greendrake Apr 25 '18 at 22:07
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There are lot of different ways a court could calculate damages -- the amount Matt was promised, the amount he ended up behind in reliance on that promise -- but I'd expect that the damages would be the difference between what was contracted for and what he actually made on whatever work he ended up doing instead of the garage.

It's practically inconceivable, based on these facts, that a court would order specific performance. There's no reason to think that monetary damages would be insufficient to make the parties whole, and the garage would probably already be built by the time the court got around to damages.

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Matt would be able to sue for his losses. This would include any costs that he has incurred that cannot be recovered and his expected profit on the job.

Alternatively, he could seek an order for specific performance: i.e. that he be allowed to build the greenhouse.

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  • Awarding expected profit seems a bit over the top. Are there any cases? – Greendrake Apr 25 '18 at 23:14
  • Heaps see The Commonwealth of Australia v Amann Aviation Pty Ltd (1991) 174 CLR 64 for an example – Dale M♦ Apr 26 '18 at 0:07

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