Freund v. Washington Square Press, Inc.

New York Court of Appeals · 1974 · Contracts

Contractsdamagesnominal damagesexpectationbook contractbreach of contractexpectation damagesnominal damages

Facts

Plaintiff author and defendant publisher entered a contract giving defendant exclusive rights to publish and sell plaintiff's work on modern drama, with a $2,000 nonreturnable advance and royalties based on sales. Plaintiff delivered the manuscript, received the advance, and defendant did not exercise its contractual 60-day right to reject the manuscript as unsuitable. After merging with another publisher and ceasing hardbound publication, defendant refused to publish the manuscript in any form. Plaintiff sought damages, including the cost of publishing the book himself, and the lower courts awarded him $10,000 for hardcover publication costs.

Issue

When a publisher breaches a contract by failing to publish an author's manuscript, may the author recover as damages the cost of publishing the book himself? If not, what damages are recoverable where anticipated royalties are not proven with reasonable certainty?

Rule

Contract damages are substitutional relief intended to place the injured party in as good a position as full performance would have done, but no better. Recovery is limited to losses or prevented gains that were foreseeable at the time of contracting and proved with reasonable certainty; damages are measured by the value of the promised performance to the plaintiff, not by the cost the defendant would have incurred in performing. Where expectation damages are too uncertain and no reliance loss is shown, only nominal damages are recoverable.

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In Seattle, Nora Levin contracted with Pine Harbor Books, a fictional publisher, to release her history manuscript. The agreement gave Nora a $4,000 nonreturnable advance and royalties based on sales, and Pine Harbor later breached by refusing to publish after accepting the manuscript. Nora cannot prove likely sales with any reliable data, but she proves it would cost $18,000 to hire a printer and distributor herself.

What is the best measure of Nora's damages?

Explanation. The proper measure is the value of the promised performance to the plaintiff, not the breaching party's saved cost of performance. Under this rule, a publishing promise gives the author an expectation in the advance and royalties, not in reimbursement of printing costs. Because Nora already received the advance and cannot prove lost royalties with reasonable certainty, she is limited to nominal damages rather than the cost of self-publication. (Derived from Freund v. Washington Square Press, Inc. (1974).)