Kearsarge Computer, Inc. v. Acme Staple Co.

New Hampshire Supreme Court · Contracts

ContractsDiscoveryDamagesMitigationinterrogatoriesdiscovery sanctionsfull disclosureduty to supplement

Facts

Kearsarge and Acme entered a one-year contract beginning June 11, 1971, under which Kearsarge provided electronic data processing services for $25 per computer hour or $2,000 per month, whichever was greater. Acme terminated the contract on January 7, 1972, claiming Kearsarge's performance was unsatisfactory. In response to a pretrial interrogatory asking for precise detail of the alleged breaches that led to termination, Acme identified eleven incidents, but at trial sought to offer evidence of additional breaches not previously disclosed. The master excluded that evidence, awarded Kearsarge the unpaid contract balance, and the record also showed Acme had spent at least $837.75 correcting Kearsarge's mistakes.

Issue

Did the master err by excluding Acme's evidence of alleged breaches not disclosed in its interrogatory answer, and by awarding Kearsarge the full balance of the contract price? Also, did Kearsarge's post-breach new business mitigate its damages, and was Acme entitled to an offset for correction costs caused by Kearsarge's errors?

Rule

Interrogatory answers ordinarily do not limit proof at trial, but a party must fully disclose requested information then available in its records or within the knowledge of its employees, and a duty to supplement is implicit when later nondisclosure would defeat the purpose of discovery by causing unfair surprise. In breach of contract, the injured party recovers the contract price less any savings caused by the breach; where the remaining performance would not require substantial cash or material outlays, the breaching party bears the burden of proving such savings. Gains from other transactions after breach are not deducted unless they could not have been made had there been no breach; absent evidence to the contrary, a data processing service contract is not so uniquely personal that new business obtained after breach mitigates damages.

🔒

See the holding & full analysis

Create a free KwikCourt account to unlock the rest of this brief — and practice the case.

The court's holding and reasoning
Doctrine tests, pitfalls & exam hypotheticals
10 practice questions + 4 AI-graded essays on this case

Free sample · practice this case

Test yourself

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

Blue Harbor Analytics, a payroll-processing firm in Portland, Maine, sued North Elm Outfitters after North Elm terminated a one-year service contract. In response to an interrogatory asking it to state in precise detail every service failure that justified termination, North Elm listed six incidents, even though its internal complaint logs and supervisors' notes contained twelve additional incidents known to employees at the time.

At trial, North Elm seeks to introduce evidence of the twelve additional incidents. Blue Harbor objects. How should the court rule?

Explanation. Although interrogatory answers do not automatically limit trial proof, discovery is intended to narrow issues and prevent unfair surprise. A party must fully disclose requested information then available in its own records or within the knowledge of its agents and employees. Because the omitted incidents were already available through North Elm's records and personnel, exclusion is proper. (Derived from Kearsarge Computer, Inc. v. Acme Staple Co. (n.d.).)