Michigan
How American Car & Foundry Co. v. Whitehead applies in Michigan: state-specific rules, key cases, and bar exam notes for Contracts.
In Michigan, the principles established in American Car & Foundry Co. v. Whitehead concerning contract restoration and reliance damages are adapted to maintain fairness and equity in contractual dealings. Michigan courts may also emphasize the need for adequate consideration in contract enforcement, aligning with the case's focus on the nature of binding agreements.
In Michigan, a party may recover reliance damages when a contract is breached, provided that the reliance was reasonable and foreseeable to the parties at the time of contracting. Additionally, any expectation of profit lost due to reliance on the contract is also recoverable.
The court allowed recovery of reliance damages for a property developer who incurred costs based on an assumption that the necessary permits would be granted.
The court ruled that reasonable expenditures incurred in anticipation of performance could be awarded despite ultimate non-fulfillment of the contract.
In this case, the Michigan court recognized that damages for lost profits could be claimed provided they were proven with reasonable certainty.
Michigan's approach to reliance and expectation damages aligns closely with the Restatement (Second) of Contracts, which is also influential in federal law. However, Michigan may impose stricter requirements for demonstrating reasonable foreseeability compared to some federal jurisdictions.
Understanding the implications of reliance damages and the general principles of contract law in Michigan is often tested on the Michigan bar exam, particularly in essay format.