Sammy Productions Inc wanted to hold an open-air concert on September 30.On February 1,it entered into a contract with Maxine,a wealthy landowner.Under the terms of that agreement,Maxine agreed to let the concert be held on her property and Sammy agreed to pay her 10 percent of its gross revenues from the concert.The parties agreed to set the price in that way because they did not have any way of knowing how many people would attend the concert.Attendance would depend upon a large number of factors,including the weather and the general state of the economy.Based on past experience,however,Sammy and Maxine agreed that the event would certainly be profitable.After signing its contract with Maxine,Sammy spent $75 000 on advertising.It also passed up an opportunity to organize a Canada Day celebration in Ottawa,for which it would have received $100 000 in net profits from the government of Canada.Maxine was aware that Sammy sacrificed that opportunity.On August 1,however,Maxine abruptly announced that she would not allow the concert to be held on her land.She offered Sammy $50 000 as compensation for its losses.It is not possible for Sammy to arrange another site for its concert given the late date.A court would most likely order Maxine to pay Sammy

Question

Quizplus · Accepted Answer

Maxine breached the contract by not allowing the concert to be held on her property even after the parties had entered into a contract, and Sammy had spent money on advertising. As a result of Maxine's breach, Sammy cannot hold the concert and suffers a loss of gross revenue of unknown magnitude. The measure of damages in this case is the net profits Sammy would have earned had the contract been performed, minus any expenses that it would have incurred in earning those profits. In this case, there is evidence that Sammy would have earned at least $100 000 in net profits from the canceled Canada Day celebration, which it had to forego to organize this concert. Additionally, Sammy spent $75 000 on advertising for the concert. Therefore, the court would most likely order Maxine to pay Sammy damages in the amount of at least $175 000, which is the sum of the profits Sammy had to forego and the expenses it incurred in promoting the concert. Therefore, the correct answer is D.

Sammy Productions Inc Wanted to Hold an Open-Air Concert on September