REMEDIES The Steak ’n Shake restaurant chain entered a contract with Pepsi to re
ID: 421277 • Letter: R
Question
REMEDIES The Steak ’n Shake restaurant chain entered a contract with Pepsi to replace King Cola with Pepsi in all its stores. Several issues surrounding the contract’s execution strained the agreement, and Steak ’n Shake canceled the contract and refused to perform. Pepsi sued, and in court Steak ’n Shake insisted that Pepsi had no “legally cognizable” damages because all potential profits were purely speculative. Pepsi argued that it stood to gain from the contract and should be compensated for the breach even though damages could not be calculated exactly. The damages could be equal to what it reasonably stood to gain from the contract if not for Steak ’n Shake’s breach.
1. Will a court award damages to Pepsi even though the company admitted the damages could not be calculated exactly?
2. What other types of damages or relief could Pepsi seek?
Explanation / Answer
Answer 1: No, the court will not award any damages to Pepsi even though the company admitted the damages could not be calculated exactly. This is because Pepsi has not gone through any legally cognizable damages. Also, the breach of contract and related damages cannot be presented due to the non-sufficient evidences to estimate the losses with the reasonable amount of certainty. Thus, the damages which Pepsi presented were hypothetical and ambiguous.
Answer 2: Pepsi could seek for compensatory damages where loss or harm has happened due to the unlawful conduct of Steak ’n Shake and related negligence by them. Also, can include the non-economic damages which would have created emotional distress.
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