Freund v. Washington Square Press, Inc.
357 N.Y.S.2d 857, 314 N.E.2d 419 (N.Y. 1974)

  • Freund wrote a book and Washington Square Press agreed to publish it, granting a $2k advance as well as royalties.
  • Washington Square Press merged with another publisher, who refused to publish the book in any form.
    • There was a 60-day ‘right to terminate’ clause in the contract, but Washington Square Press didn’t exercise it.
    • Freund wanted specific performance (forcing the company to publish the book).
  • The Trial Court denied specific performance, but awarded monetary damages. Freund appealed.
    • The Trial Court found that it would have cost Freund $10k to publish the book himself, so they awarded him $10k as the cost of completion.  That’s a very odd way to think about damages, considering that he isn’t going to publish it himself.
  • The Appellate Court affirmed.  However, there was a dissent that said Freund should recover nominal damages only.
    • The Appellate Court said that the case was similar to a construction contract.
    • In a dissent it was argued that awarding the cost of publication put Freund in a better position that he would have been if the contract was honored.
    • In another dissent it was argued that there was no reliance interest in the case.  The expectation interest was the advance and the royalties (notoriety and prestige are not compensable).  Advance was received, and royalties were speculative, not actual loses.  The promised result of the contract was a % of the sales, not the books themselves!
      • Should damages be calculated by the value to the plaintiff of the promised performance, or by the cost of that performance to the defendant?
    • In addition to benefit of the bargain and passing the Hadley test (foreseeability of loss), you also have to be able to specify a reasonable estimate of what the loss is.  This tends to favor established companies.