## Facts

- U.S. News sought to expand magazine circulation into the college-student market and contracted with American List, a mailing-list compiler.
- The parties entered a 10-year agreement under which American List would compile and rent to U.S. News mailing lists of college-student names.
- Because American List lacked prior experience with college-student lists, U.S. News agreed to effectively fund start-up costs through higher per-name fees during the first five years.
- The contract included a schedule estimating annual quantities, fees payable, and American List’s estimated annual losses and profits over the 10-year term.
- U.S. News repudiated the contract before completion, and American List sued for damages based on the remaining term.

## Issues

1. Whether American List’s damages from U.S. News’s repudiation were general damages (flowing naturally from the breach) or special/consequential lost-profit damages requiring proof of foreseeability and contemplation at contracting.
2. Whether a court may discount future contract payments to present value using a discount factor that includes the risk the nonbreaching party might not perform in the future.

## Decision

- The Court of Appeals held American List sought general (direct) contract damages and that those damages were sufficiently proved.
- The Court held the trial court erred by discounting the future payment stream using a factor that included the risk of American List’s future nonperformance.
- The Court modified the intermediate appellate order and remitted to the trial court to determine a proper discount factor and recalculate damages.

## Legal Principles

- General contract damages are those that flow naturally from the breach and require proof of causation and reasonable certainty, not separate proof that the damages were within the parties’ contemplation.
- Special (consequential) damages, including many lost-profit claims, are recoverable only if foreseeable and within the parties’ contemplation when the contract was made.
- Where repudiation deprives a party of the contract’s payment stream, the unpaid contract value (subject to appropriate offsets) is typically recoverable as general expectation damages.
- Present-value discounting should reflect the time value of money; it should not be reduced by speculative adjustments for the nonbreaching party’s hypothetical future nonperformance once the factfinder determines the party would have performed.

## Conclusion

The court treated the unpaid value of the long-term contract as general expectation damages rather than consequential lost profits, but required recalculation because the present-value discount rate could not include a component for the plaintiff’s supposed risk of future nonperformance.


American List Corp. v. U.S. News & World Report, Inc., 75 N.Y.2d 38 (N.Y. 1989)