Jerry Locks v. Gerald Wade

Superior Court of New Jersey, Appellate Division · 1955 · Contracts

114 A.2d 875 (N.J. Super. Ct. App. Div. 1955)

Updated July 26, 2026

ContractsDamagesLease of personal propertyLost profitsexpectation damageslessor damagesrelettingmitigation

Facts

Plaintiff agreed to lease defendant a juke box for two years, supply records, and replace worn parts, while defendant agreed to share proceeds on a specified basis with a minimum payment of $20 per week to plaintiff. Defendant allegedly repudiated the contract before plaintiff installed the machine. After the breach, plaintiff rented the component parts of the machine he had intended to lease to others. The trial court awarded plaintiff $836, apparently calculated as the two-year minimum payments less plaintiff's cost of performance and depreciation.

Issue

When a lessee repudiates a lease of personal property that is readily available on the market, must the lessor's damages be reduced by amounts realized or reasonably realizable from reletting the same article to others? Also, did the lease's liquidated damages clause bar any recovery because the breach occurred before the machine was installed?

Rule

Where a plaintiff lessor agrees to lease an article of which the market supply is for practical purposes not limited, damages for the lessee's breach are the difference between the contract price and the cost of performing the contract, and gains from a later lease are not deducted unless the breach enabled the lessor to make those gains. A liquidated damages clause tied to average weekly earnings after operation does not impliedly waive all damages for a breach occurring before installation absent such an intention.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

North Shore Sound Systems, a fictional equipment lessor in Cleveland, agreed to lease an identical digital karaoke unit to Maya Benton for 18 months, provide song-library updates, and service worn parts. Maya repudiated before installation. North Shore later placed that same unit with another bar, and its manager testifies identical units were readily available from suppliers, while suitable bar locations were difficult to secure.

If Maya argues that North Shore's damages must be reduced by the revenue from the later lease of the same unit, what is the strongest response?

Explanation. The majority rule is that when the leased article is readily obtainable in an effectively unlimited market, a later lease of the same item does not reduce damages unless the breach enabled that later gain. The lessor could have performed both leases by obtaining another identical article, so denying recovery would deprive the lessor of the benefit of the first bargain. The measure is the contract price less the cost of performing the breached contract.