Valentine v. General American Credit Inc.
420 Mich. 256, 362 N.W.2d 628 (Mich. 1984)
- Valentine worked for General. She was fired. She sued for breach of contract.
- Valentine argued that she was entitled to job security and peace of mind because she was under a contract with her employer General American Credit.
- Since breach of her employment contract led to mental distress, Valentine she should be able to recover damages.
- Valentine also wanted exemplary damages (aka punitive damages) which are generally not given in Contract Law.
- Trial Court dismissed the claim of mental distress. Valentine appealed.
- The Appellate Court affirmed.
- The Appellate Court found that unless a contract explicitly includes a provision for “job security” employment can be terminated at any time by either party. Job security is not an obligation imposed on an employer by law.
- The Appellate Court agreed that mental distress could be foreseeable, and Valentine might not be made whole without receiving an award for mental distress. However, she was out of luck because that isn’t the way Contract Law worked.
- Hadley v. Baxendale, (9 Ex. 341 (Ex.Ct. 1854)) held that, in general, you can recover for all damages that are foreseeable. But mental distress is always a foreseeable consequence of breaching a contract, and the Court didn’t want to establish a precedent of awarding damages for mental distress under literally every breach of contract!
- The basic rule is that law does not generally compensate for all losses suffered (e.g. legal fees). In contract actions, the market price is the general standard.
- Mental distress can be recoverable in contracts with a personal element. These include breach of a promise to marry. However, jobs are generally economic contracts and do not, as such, contain an element of personality. An employment contract is not entered into primarily to secure the protection of personal interests.
- See Stewart v. Rudner (84 N.W.2d 816 (1957)) for example of a contract with a personal element.