## Facts

- Emmett and Mildred Osteen paid Ritchie Johnson $2,500 under an oral agreement to promote their daughter Linda as a country-western singer and composer.
- Johnson agreed, for one year, to advertise Linda through mailings, arrange recording sessions, prepare two records, and press and mail copies of the first record to disc jockeys nationwide; if the first record had success, he would press and mail copies of a second record.
- Johnson arranged recording sessions in which four songs were recorded, produced a record containing two songs, and had 1,000 copies pressed.
- Johnson mailed 340 copies to disc jockeys, sent 200 copies to the Osteens, and retained the remainder; he also distributed flyers and advertised Linda in trade magazines.
- The first record received a favorable trade-magazine review and rating.
- The Osteens asserted Johnson failed to continue promotion for the full year, failed to press and distribute the second record despite the first record’s reception, and caused another person to be listed as a co-author on a song written solely by Linda.

## Issues

1. Whether Johnson’s failure to produce and distribute the second record (and related shortcomings) constituted a substantial breach of the oral contract.
2. If the breach was substantial, whether the Osteens could obtain restitution of the $2,500 paid, reduced by the reasonable value of benefits Johnson conferred.

## Decision

- The Court of Appeals held Johnson’s failure to produce and distribute the second record constituted a substantial breach.
- The court rejected treating the case as turning on total nonperformance, because Johnson did provide partial promotional services and produced one record.
- The court ruled the Osteens were entitled to restitution rather than being limited to nominal damages based on substantial performance.
- The judgment was reversed and remanded for a new trial limited to determining the reasonable value of Johnson’s services and the net restitution owed after offsetting that value against the $2,500 payment.
- The trial court’s nominal-damages award for the wrongful co-author attribution and its order requiring delivery of certain tapes and records were not disturbed.

## Legal Principles

- A party may seek restitution when the other party’s breach is substantial and affects the essence of the exchange, even if there has been significant partial performance.
- The proper restitution measure is the amount paid by the injured party minus the reasonable value of benefits actually received from the breaching party.
- The label “substantial performance” does not bar restitution if the omitted performance is central to the contract’s principal purpose.

## Conclusion

The appellate court treated the failure to produce and distribute the promised second record as a substantial breach going to the core promotional objective, and it remanded for calculation of restitution equal to the contract payment less the reasonable value of the partial promotional services provided.


Osteen v. Johnson, 473 P.2d 184 (Colo. App. 1970)