## Facts

- Jerry Locks agreed in writing to lease Gerald Wade an automatic phonograph (jukebox) for two years, supply records, and replace worn parts.
- The agreement required Wade to pay Locks a minimum of $20 per week and provided for a profit-sharing arrangement.
- Before the jukebox was installed, Wade repudiated the agreement; Locks never installed the machine on Wade’s premises.
- Locks later placed the same machine’s component parts with other locations; he testified that similar equipment was readily obtainable in the market, but locations were difficult to secure.
- Locks sued for breach of contract and obtained a trial-court award of $836, calculated as the guaranteed minimum payments over two years minus estimated performance costs and depreciation.
- On appeal, Wade contested only damages, arguing (i) Locks’ recovery should be reduced by earnings from later rentals and (ii) a liquidated-damages clause in the contract barred recovery for the pre-installation repudiation.

## Issues

1. In a breach of a chattel lease where the leased article is readily obtainable in the market, must the lessor’s damages be reduced by amounts earned from later leasing the same equipment (or its parts) to others?
2. Does a liquidated-damages clause addressing breach after installation preclude recovery of expectancy damages for a repudiation occurring before installation?

## Decision

- The Appellate Division affirmed the $836 judgment for Locks.
- The court held that Locks’ damages were not reduced by later earnings from leasing the jukebox (or its parts) elsewhere.
- The court held the liquidated-damages clause did not bar recovery for a repudiation occurring before installation because it did not apply to that situation.

## Legal Principles

- For breach of a lease of a chattel whose market supply is effectively not limited, the proper measure of damages is the lessor’s lost profit on the breached contract (contract payments minus costs saved and depreciation), even if the lessor subsequently leases the same or similar goods to others.
- Mitigation-by-reletting rules associated with real property leases do not control when the lessor could, absent breach, have supplied both the breaching party and later customers by obtaining additional units from the market.
- A liquidated-damages clause is construed by its scope and manifested intent and will not be extended to bar expectancy damages for a type of breach not covered by its terms (here, repudiation before installation).

## Conclusion

The court affirmed an award of lost-profit damages for repudiation of a two-year jukebox lease, ruling that later rentals did not offset recovery because the lessor could have made both deals, and that a post-installation liquidated-damages provision did not apply to a pre-installation breach.


Locks v. Wade, 36 N.J. Super. 128, 114 A.2d 875 (N.J. Super. Ct. App. Div. 1955)