## Facts

- Rockingham County’s board voted on January 7, 1924, to award Luten Bridge Co. a contract to construct a bridge, by a 3–2 vote.
- After a commissioner resigned and was replaced by an opponent of the project, the board adopted resolutions repudiating the contract and directing that Luten be notified the county would not recognize it.
- On February 21, 1924, the board declared the contract invalid and instructed that Luten be told to stop work; later resolutions warned that any further work would be at Luten’s risk.
- The county contended it gave notice of cancellation before the bridge’s erection substantially began.
- Luten continued performance and completed the bridge despite receiving the county’s repudiation notices.
- At the time Luten was informed the county would not proceed, Luten had performed work valued at approximately $1,900.
- Luten sued to recover the full contract amount.
- At trial, the county admitted the contract and breach but disputed the measure of damages; the court excluded evidence on notice and avoidable damages and directed a verdict for Luten for the full amount claimed.

## Issues

1. Whether a contractor, after receiving clear notice of the other party’s repudiation, may continue performance and recover the full contract price.
2. Whether the nonbreaching party must mitigate damages by stopping avoidable performance after repudiation.
3. Whether excluding evidence on the timing of repudiation and directing a verdict for the full contract amount was error.

## Decision

- The Fourth Circuit reversed and remanded.
- The court held the county’s repudiation was a breach, but Luten could not recover for work performed and costs incurred after it had notice the county would not honor the contract.
- Recoverable damages were limited to (a) the value of work and materials furnished before notice of repudiation and (b) the profits Luten would have earned had it stopped work when notified.
- The trial court erred by excluding the county’s evidence relevant to notice and damages and by directing a verdict for the full contract price.

## Legal Principles

- Contract damages aim to place the injured party in the position it would have occupied had the contract been performed, not a better position.
- After an unequivocal repudiation and notice, the nonbreaching party has a duty to avoid unnecessary loss and may not increase damages by continuing performance that is reasonably avoidable.
- When repudiation occurs, the promisee may treat the contract as ended and sue for damages measured as of the time notice is received, including incurred costs to that point and expected profit, but excluding avoidable post-notice expenditures.
- The timing of repudiation notice and the extent of work completed before notice are factual matters material to the proper measure of damages.

## Conclusion

The court held that while the county breached the bridge contract, Luten’s recovery was limited to pre-notice expenditures and expected profits because continued construction after clear repudiation was avoidable; the directed verdict for the full contract price was reversed and the case remanded for a proper damages determination.


Rockingham County v. Luten Bridge Co., 35 F.2d 301 (4th Cir. 1929)