## Facts

- Erie County sought to finance, construct, and own a domed sports stadium near Buffalo.
- Kenford assembled options and acquired land near the proposed site and, with related entity Dome Stadium, Inc. (DSI), proposed donating the stadium acreage in exchange for DSI receiving long-term lease or management rights.
- The parties executed an agreement on August 8, 1969 under which:
  - Kenford would donate roughly 178 acres for the stadium and access.
  - The County would commence construction within 12 months.
  - The County would negotiate a 40-year lease with DSI; failing that, the parties would execute a 20-year management agreement.
  - The County expected various revenues, including increased property tax receipts from nearby “peripheral lands” owned or later acquired by Kenford.
- The County solicited bids, but bids exceeded the amount appropriated; the County terminated the stadium project and the agreement.
- Kenford and DSI sued for breach, seeking damages that included DSI’s prospective operating profits and Kenford’s anticipated appreciation of peripheral lands.
- In 1986, the Court of Appeals addressed DSI’s lost-profits claim and rejected it.
- After a retrial limited to peripheral-land appreciation, a jury awarded Kenford about $6.5 million; the Appellate Division affirmed; the County appealed again, leading to a 1989 Court of Appeals decision rejecting that consequential-damages theory as well.

## Issues

1. Whether DSI could recover long-term lost prospective profits from operating/managing the stadium as consequential damages for the County’s breach.
2. Whether Kenford could recover consequential damages for unrealized appreciation in the market value of peripheral lands allegedly attributable to the stadium’s construction and operation.
3. What showing is required to establish that consequential damages were within the parties’ mutual contemplation at the time of contracting, as distinct from general foreseeability.

## Decision

- The Court of Appeals held DSI’s claimed lost profits were not recoverable because they were speculative and not shown to be within the parties’ contemplation when contracting.
- The Court of Appeals later held Kenford’s claimed peripheral-land appreciation damages were not recoverable because, even if value increases were generally foreseeable, the agreement did not show the County assumed liability for that investment-based loss.
- The Court reversed the judgment allowing peripheral-land appreciation damages and dismissed that claim for consequential damages.

## Legal Principles

- Consequential damages for breach of contract are recoverable only if they are:
  - caused by the breach,
  - proved with reasonable certainty (not speculative), and
  - fairly within the parties’ mutual contemplation at the time of contracting.
- “Contemplation of the parties” turns on the contract’s nature, the surrounding circumstances, and the liability the parties reasonably intended to assume.
- Mere awareness that performance may create downstream economic benefits (e.g., nearby land appreciation) does not establish that the breaching party agreed to pay for the counterparty’s unrealized gains if performance does not occur.
- Where the contract lacks an express or implied undertaking to insure a counterparty’s projected profits or investment returns, the risk of non-realization remains with the party pursuing that gain.

## Conclusion

The Court of Appeals limited consequential damages to losses the parties can fairly be said to have allocated by agreement: speculative long-range profits and unrealized land appreciation tied to an unbuilt stadium were not recoverable because they were not proved with reasonable certainty and were not shown to be a probable, mutually contemplated result of breach at the time of contracting.


Kenford Co. v. County of Erie, 67 N.Y.2d 257 (N.Y. 1986)