80 A.D.2d 318 (N.Y. App. Div. 1981)
American Standard, Inc. v.
Should damages be awarded based on the cost of performance or the diminution in value due to the breach of contract?
In determining damages for breach of contract, where the breach involves a failure to complete contractual performance, courts often consider whether the remedy should focus on restoring the injured party to the position they would have occupied had the contract been fully performed or based on the diminution in the value of the promised performance.
The court awarded damages based on the cost of performance, requiring Schectman to pay for the full cost to adhere to the contracted land grading obligation.
American Standard v. Schectman is significant in contract law as it underscores the importance of the performance aspect in contractual obligations. The outcome illustrates that specific performance, even if economically inefficient, can be prioritized to honor the specific expectations and agreements of the contractual parties. For law students, this case highlights judicial emphasis on honoring the letter of a contract, ensuring that parties are held accountable to their explicit agreements.