Since the deal between Ellen and Sam has fallen apart, Ellen decides to perform at a different nightclub.
She personally signs a binding written contract with Danny’s Bar Limited ("DBL"), a company which owns
and operates a large venue in St. John’s that features a bar and performance stage. The contract
contains the following terms:
(a) Ellen will perform one night only;
(b) Ellen will be paid 50% of the total cover charges for that night while DBL will retain the other
50%;
(c) Each customer at the performance will be charged $20 as a cover charge;
(d) DBL anticipates making a profit of $5,000 on liquor sales during Ellen’s performance but Ellen
will not receive any portion of those profits; and
(e) DBL will ensure the stage is equipped with Steinway audio speakers, which are very expensive
and high quality.
Three days before the scheduled performance, Ellen meets with the manager and tells him she is having
second thoughts about the performance because she is used to singing in smaller clubs. As an incentive,
the manager promises to give her an extra 10% of the total cover charges for the night. Ellen happily
agrees. However, the next day, the manager tells Ellen he is not going to be able to rent the Steinway
equipment because it has been taken off the market due to faulty and dangerous wiring. Ellen gets very
upset and tells the manager that, because of this, she is not going to perform.
Questions:
(a) If DBL has a claim against Ellen for breach of contract, what amount of compensation would it
likely be entitled to as damages? Assume DBL averages 100 customers each night. Ignore the
fact that the manager had promised to give Ellen an extra 10% of the total cover charges.