Introduction

If you are a defendant, some of this chapter isn't directly relevant. However, it's still a good idea to read the whole chapter carefully. It will help you evaluate the strength of the plaintiff's case as well as the strength of your own defense. It will also give you an idea of some arguments the plaintiff might make and the amounts the plaintiff might try to collect.

Before you file a lawsuit, ask yourself two questions: How good are my chances of winning? If I win, will I be able to collect? If your answers lead you to conclude your chances are good, then you need to ask a third question: How much should I sue for?

This chapter guides you through these questions. Specifically, it shows you how to:

• determine whether the deadline for filing your kind of lawsuit has passed
• evaluate the strength of your evidence
• preserve your evidence
• figure out whether you can collect if you win, and
• decide how much to sue for.

Never sue just to "get even." If you don't care about recovering money and only have a burning desire to get even with someone, I'd advise you not to file a civil lawsuit. Judges figure out your motives and treat these cases harshly, and everyone loses -- the plaintiff and the defendant. But if court is the only place you can go to right a wrong, then file. Remember, however, the ancient Gypsy curse "May you be involved in a lawsuit in which you know you are right."

Is Your Case Fresh Enough?

For all sorts of reasons, lawmakers have decided that courts should decide recent cases, not old ones. The main reason is that evidence (especially people's memories) is more accessible and trustworthy when it's fresh. There's a practical side to things, too -- many courts are very busy and would be overwhelmed if they entertained old cases. There's also an element of fairness involved -- would-be defendants shouldn't have to spend years wondering whether a lawsuit is about to fall on them.

Laws called "statutes of limitations" govern the time period within which you're permitted to sue after the incident that led to the lawsuit occurred. If the statute of limitations period has passed, in most cases it's useless to sue. (But see "Don't Automatically Give Up on Old Claims," below.) The statute of limitations period differs according to the type of case, as explained in "Statutes of Limitation," below.

For claims against the federal government, the time limits are different than for claims against state or local government. If your claim is against a federal government agency, it's best to consult a lawyer.

In some situations, more than one statute of limitations may apply. For example, suppose you've been hurt in a car accident. You'd have two years from the date of the accident to sue for the injuries to your body, and three years to sue for the damage to your car. However, you should handle it all in one suit within two years.

The statute of limitations is shorter for an oral contract than for a written one. Most of your contracts, though, are probably at least partially written. The work order you sign at a garage, your cousin's IOU for a loan, a credit account with a department store, and many other transactions do not require signing a document labeled "Contract," but they all involve written agreements.

It's important to understand that the statute of limitations for a breach of contract starts to run on the day the contract was broken, not the day it was written. If the contract called for installment payments, the statute runs separately for each installment as it becomes due. For example, suppose your written contract with a customer calls for one payment on March 15, 2007, and a second payment on September 15, 2007. If the customer failed to pay on March 15, 2007, you can sue to collect on that payment until March 15, 2011. If the customer doesn't make the September 15, 2007, payment either, you can sue to collect on that payment until September 15, 2011. Of course, if you wait that long to sue, you won't be able to recover the payment that was due March 15, 2007, because more than four years will have passed.

Don't automatically give up on old claims. Determining if the statute of limitations has expired can get complicated. If you think that your claim may be too old, but you aren't sure, consult a lawyer. On rare occasions, a lawyer may be able to figure out a way around a statute of limitations time limit.

[Statutes of Limitations Table] omitted for online sample chapter.

Evaluating the Evidence

Before deciding to file a lawsuit, you should realistically examine your chance of winning. The same is true if you've been sued and must decide whether to defend or settle out of court.

Lawsuits are won by people who have the facts and the law on their side, not by those who have the saddest stories. Sometimes nice people are surprised when they lose a case because they had assumed that courts always arrive at results that are just. Unfortunately, it isn't that simple.

If you are a potential plaintiff, to analyze your chances of winning you'll need to assess:

• whether your evidence will convince the court to award you damages
• whether your evidence is admissible in court, so that it can be considered by the judge or jury, and
• whether you can prove each fact required under the law for your type of suit.

If you are a defendant, you'll need to look at:

• whether the plaintiff's theory about what he or she needs to prove to win is correct
• whether your evidence is admissible in court so that it can be considered by the judge or jury, and
• whether your evidence is strong enough to convince the court that the facts are not as the plaintiff claims.

Is the Evidence Convincing?

Let's look at each of these important issues in more detail, first from the plaintiff's perspective. A plaintiff's first step should be to consult his or her adviser -- the Sounding Board or legal coach, discussed in Chapter 1. Carefully explain the facts of your case and the evidence you plan to use. Ask for an honest assessment. Then urge your Sounding Board or legal coach to play devil's advocate -- that is, to challenge your conclusions and evidence and to state the other side's case as strongly as possible. Ask how your helper would decide the case if he or she were the judge. If your case doesn't look so hot to your wise adviser, it probably won't look any better in court.

Such a review would have been helpful to a couple that once appeared in my courtroom. They described how their Volkswagen engine had burst into flames while they were driving down the freeway with their young child in the back seat. They pulled over quickly and got out safely, but their car was a total loss. They sued the local Volkswagen dealer who had done repairs on the gas lines about two weeks earlier.

After hearing their testimony, I asked if they'd had a mechanic examine their ruined car to try to determine the cause of the fire. They hadn't thought it necessary, assuming anyone would conclude that the dealer had done the gas line repair incorrectly. I was sympathetic and even understood how they had come to that conclusion. Unfortunately, I also knew that they'd flubbed their task of proving to me that the fire had been caused by the dealer's negligence. Unproven probabilities or suppositions weren't enough for me to rule in their favor -- they needed some hard evidence that the fire really was the dealer's fault. Or to put it another way, I could declare them the winner only if their evidence led to the conclusion that their theory was more likely to be correct than any other explanation. Because they lacked that sort of evidence, judgment was for the defendant.

I think a good advisor could have helped this couple see that in their outrage about the fire, they had jumped to an unproven conclusion that couldn't stand on its own in the harsh light of the courtroom. A good advisor would have asked: "Why is it more likely that the fire resulted from the repair than from one of a hundred other causes?" And once this question was asked, I think it would have been obvious to the couple that they'd need to ask a mechanic to do a detailed examination of the burned car.

Is the Evidence Admissible?

Okay, you believe your evidence is convincing -- that a court would be convinced that the defendant's actions led directly to the harm you suffered. Now you must figure out if it is admissible. That means that it is the type of evidence the court is legally authorized to hear and consider. Evidence includes any witnesses who can support your case, as well as photographs, documents, and the like.

The study of evidence is a yearlong course at most law schools and, as you will readily understand, I cannot cover it in depth here. But I can summarize the most important principles. This material is discussed in more detail in Chapter 13.

In assessing your evidence, follow these general rules:

Most witnesses must have personal knowledge. Unless a witness qualifies as an expert (see next paragraph), a witness must have been present at some significant event and have personal knowledge of what happened in the story of your case to be able to testify in court about those facts. Possible witnesses include you, your friends and your relatives, as well as complete strangers, as long as they have firsthand knowledge. For the most part, people who merely heard about the events from someone else can't testify.

Opinion evidence is allowed infrequently. Generally, only a person with specialized training in a scientific or technical field (called an "expert witness") can give an opinion in court. In fact, all sorts of experts give opinions in court, often in exchange for a fee. For example, an experienced mechanic would normally be considered as an expert witness who could give an opinion about whether a car repair was done properly. Similarly, an electrician could testify about a wiring installation. In some fields, college professors can give helpful testimony or know of other experts who may be able to help you.

For a more thorough review of evidence rules, see Represent Yourself in Court, by Paul Bergman and Sara J. Berman-Barrett (Nolo). Also, if you need the help of an expert witness, see California Expert Witness Guide, published by the California Continuing Education of the Bar (CEB) and available at most law libraries. Chapter 13 has some excellent tips on locating a good expert.

There are a few areas in which a nonexpert can offer an opinion, if relevant. A nonexpert can offer testimony regarding:

• the identity of a person, including descriptive features such as voice or physical traits
• a person's appearance, state of intoxication, health, or age
• the witness's own intention, motive, or emotion
• the value of the witness's own property or services
• measurements such as speed, distance, or size, and
• the directions from which sounds came.

Written statements are usually not allowed. Most of the time, you can't use written statements by witnesses in court. This rule applies to most police reports and even to notarized affidavits and declarations made under penalty of perjury.

There is an exception, however: Routine business and public records may be brought into court by their "custodian" (the person responsible for maintaining the records). Here are some examples:

• a bank officer can present monthly bank statements as evidence
• a landlord or property manager can introduce rent receipts, and
• a creditor can introduce business records showing when bills were sent and payments received, as long as the person who supervises the record keeping is available to testify.

A knowledgeable witness must identify photos and other physical objects. For photographs, a witness needs to be able to testify in court that the photo accurately depicts how a particular scene looked at a particular time. However, you don't have to produce the photographer to testify as to the contents of the photo or to the process used. Other physical objects may be used as evidence as long as a witness can link them to the case using the witness's own personal knowledge.

Impartial witnesses are preferable. An impartial witness who didn't know any of the parties before the event is a more valuable witness than your friends and relatives. These witnesses are unbiased and have nothing to gain if you win your case. If, however, your only testimony is from your spouse and your sister, by all means use them -- their testimony is a lot better than nothing.

You can't introduce evidence about a person's character. Evidence showing what a good person you are -- and what a bad person the other side is -- is generally not allowed.

Can You Prove Each Legally Required Fact?

The final test in assessing your chances of winning is harder to explain to people without formal legal training: For every type of lawsuit, a plaintiff must prove a list of required facts (called "elements") to win. The elements of lawsuits are what law students study for three years and legal authorities write about almost endlessly. Sometimes the requirements change as the Legislature enacts new laws and amends old ones, and courts interpret the laws.

For the relatively simple lawsuits I discuss in this book, I don't believe you need torture yourself over whether you can prove each required fact. Instead, read over the descriptions of tort and contract lawsuits in Chapter 1. If your facts seem to fit these molds, your major pieces of evidence are admissible and your Sounding Board or legal coach agrees that you have a solid case, then proceed to prepare your suit. If your case is more complicated, check "Complaints for Other Types of Lawsuits" in Chapter 5, where I discuss the elements of some other claims.

The Defendant's Perspective

If you're a defendant, your part in the case formally begins when you receive a Summons and Complaint from the plaintiff. At this early stage, you can follow much the same path as a plaintiff in evaluating the strength of your own case.

First, determine whether the plaintiff has filed the lawsuit within the permitted period of time allowed by law. Check the statute of limitations that covers the type of case that the plaintiff has brought to find out. If the case is too old, your most cost-effective alternative is to raise the statute of limitations problem in your Answer, the document a defendant files in response to the plaintiff's Complaint. Preparing an Answer is discussed in Chapter 8. Another alternative is to file a complicated motion called a Demurrer, which could cause the case to go away after some legal wrangling and a court appearance. But preparing and filing a Demurrer generally requires the assistance of a lawyer.

After checking to see whether the plaintiff has filed in time, read over the Complaint to see whether the plaintiff seems to have covered the basic elements of the particular type of case, whether it's a tort case or a contract case. If it is another type of case, consult the resources discussed in "Complaints for Other Types of Lawsuits" in Chapter 5, and make the same decision.

Go over the facts of the case as you perceive them, noting where and how your account differs from the version in the plaintiff's Complaint. Lay out your evidence -- your account of events, documents supporting your account, statements by potential witnesses -- and try to determine whether it would be admissible in court, as explained above.

Then present your case to a trusted adviser -- a Sounding Board or legal coach. You're looking for help in spotting any weaknesses in your case, along with suggestions about additional ways to prove your key points.

Preserve Your Evidence Now

If you've concluded that your evidence is convincing and admissible, it's time to preserve any evidence you might use. Bruises and skid marks disappear in time. Work orders and cash register receipts are often misplaced. Witnesses move and memories fade.

To preserve your evidence, set up some files in a safe place. Make one file for repair bills, another for medical reports, and as many more as you need for your different kinds of evidence. I can't emphasize too much how important this is. Many times I've seen witnesses in court say that they've lost an important document. If they ask for a few more days to search, I usually can't allow it. Evidence produced after the trial is over is useless.

Here are some of the things you should put in your files.

Photographs. Try to take pictures as close to the time of an event as possible, before the scene changes. Photos taken later may be used, but only if nothing else is available. Here are some pointers on particular situations:

• If the subject is difficult to photograph, such as a loose rug in a dark hallway, or a botched paint job on the underside of a roof overhang, hire a professional photographer.
• If the condition of a car is important and the car is being held in a garage, go and take a picture before it is repaired or moved.
• If the presence or absence of a sign is important, photograph the scene before it changes. To prove that the photograph was not taken before a particular date, place a copy of that day's newspaper in the picture.
• Use color film to photograph bruises or wounds. If they are changing rapidly, take a picture every day or two and record the date each was taken. Again, to prove that a photograph was not taken before a particular date, place a copy of that day's newspaper in the picture.

Medical evaluation. Seek a medical evaluation of any physical or emotional injury as soon as possible. Begin with your regular physician. If you're getting treatment from a chiropractor or another non-M.D., a medical doctor still should evaluate you. Most injury cases are settled with insurance companies, which are notoriously skeptical of chiropractors and other alternative healers. If you don't have an M.D., ask your chiropractor or other healer for a referral.

Physical objects. Keep all relevant physical objects. You don't want to have to testify that you threw an important piece of evidence into a garbage can. Also, try to keep damaged items in their damaged condition so that you can introduce them as evidence in court. Where this is impractical -- for example, if you need to repair or replace your faulty wiring or car -- get at least two written estimates before having the work done. Some insurance adjusters will tell you they need three estimates and that you must have the work done by the lowest bidder. This simply isn't true.

You can use the estimates in settlement negotiations and at any arbitration hearing, and you can have the people who gave the estimates testify at trial. If a particular part of the about-to-be repaired item shows the damage, have the mechanic (or other repairperson) save the part.

Witnesses. If you know of any witnesses to the event in question, find them and ask them what they saw. Police reports sometimes list witnesses' addresses and phone numbers. (If the witness doesn't have deep roots in the community, try to get the name, address, and phone number of someone who will be able to help you locate your witness for a future trial date.)

If a witness seems helpful, explain how important his or her testimony is and ask if you can conduct an interview with a video or tape recorder. If the witness doesn't want to be on tape, write a description of what the person said and ask him or her to sign it. If the witness refuses to sign, ("I don't want to get involved"), an unsigned statement can still be valuable under some circumstances, as long as a third person was present at the interview and will testify that it is a true statement of what the witness said.

Recorded statements of witnesses are not allowed in court under most circumstances, but they can be very effective in settlement negotiations. They are also useful as a reminder for a witness who plans to testify in court. And if the witness changes his or her testimony at trial, the video or tape recording can be played for the judge or jury to show the witness's lack of reliability (this is called "impeaching the witness").

Pain diary. If you've been physically or emotionally injured -- no matter how minor or severe -- keep a daily "pain diary." Every few days, describe briefly how you feel, whether you are having problems with sleep, mobility, or other consequences, and any drugs you are taking. This information is nearly impossible to remember accurately months later. Don't lay it on too thick, however. Your opponent will probably see your diary eventually and will try to get it in front of the judge if you are too melodramatic.

Police reports. Police reports of vehicle accidents are generally not admissible as evidence in court, but they can help you investigate and settle your case. Insurance adjusters often base their settlement offers on the opinions of investigating police officers. To obtain a police report, visit the applicable police department, sheriff's office, or California Highway Patrol office. Ask for a copy of the officer's report. You'll probably have to pay a few dollars for copying charges.

Accident reconstruction experts. These experts investigate accidents (usually vehicle crashes) by examining vehicles and accident sites and scientifically determining such factors as distance, time, and rate of speed. If you want to show that a police officer's opinion was wrong or if your accident was complicated, consider consulting an accident reconstruction expert. You can find them in the Yellow Pages for major cities. Some are quite good; others have little real expertise. To find a good one, ask for references (and check them out) and credentials. Make sure you know what the fee is in advance.

Can You Collect the Judgment If You Win?

When I was a judge, I often felt a little sad after telling some self-represented plaintiffs that I was ruling in their favor. Their faces would brighten, their eyes would dart around the courtroom nervously, and then they'd ask what seemed to be the next logical question: "When do I get paid?" It was almost as if they thought the courthouse had a window where winning plaintiffs could go and watch a clerk count out the money due. "The sad truth is," I'd say, "you've just finished the easy part of your case. Now you must start the hard part -- collecting."

In fact, some judgments are aptly described as "not worth the paper they are printed on." This isn't the court's fault. The Legislature has passed many laws to protect people who have little money from losing what is left. These are called "exemptions," and exempt property includes basic household goods, furnishings, and clothing; 75% of wages; $2,300 of equity in a car; and between $50,000 and $150,000 of equity in a house, depending on the age and family status of the debtor.

If you win your case, the judge or jury will decide how much the defendant should pay you. Some defendants pay right away. Some never pay. The point is to ask yourself "Can I collect if I win?" before you file your case. Don't sue unless you can answer, "Yes." If the defendant won't pay voluntarily, you can use certain collection techniques to force payment.

Court judgments last for ten years in California and can be renewed indefinitely. This means that even if the defendant doesn't have any money or property now, you may be able to collect some time in the future.

Here are some ideas about collecting from certain defendants:

Large businesses. If the defendant is an airline, department store, or other established business, collecting should be no problem. Big corporations normally pay off judgments under $25,000 within a month or two. Although they can appeal any case they lose, they usually don't because the legal fees they'd incur don't justify appealing. Paying a judgment of under $25,000 won't break them.

Small businesses. If a small business has a regular store or office where it pays rent, issues paychecks to employees, or operates a cash register, collecting probably won't be a big problem. By contacting the appropriate county official, you can have a sheriff, marshal, or constable actually go to the business and take your money. However, if the business is run by one person who operates informally out of his home with no cash register or bank account, you may have problems collecting.

Individuals. People who receive public assistance, Social Security, or disability payments, or who have no recognizable assets or bank accounts, are difficult to collect from. On the other hand, the following defendants are usually not hard to collect from:

• people with applicable insurance policies -- the insurance company pays on their behalf
• wage earners -- the sheriff can collect about 25% of their paycheck, with some exceptions, and
• owners of real estate -- you can place a lien and either foreclose or get paid when they sell the property.

If the defendant files for bankruptcy. If the defendant filed for Chapter 7 bankruptcy before your case arose, it normally won't affect your suit. (Chapter 7 bankruptcies erase most debts; Chapter 13 bankruptcies prioritize the debts and impose a plan for repayment on the debtor. Under the new bankruptcy laws that went into effect in 2005, some higher-income persons who could afford to pay back a portion of their debt over a five-year period aren't allowed to proceed under Chapter 7 and may be forced to file under Chapter 13.) However, if the defendant files for bankruptcy after losing your case, your judgment will often be wiped out along with other debts. In a few instances, you may still be entitled to collect your court judgment after the bankruptcy case is over. For instance, debts that arise from drunk driving can't be erased in bankruptcy. Also, court judgments that arise from willful or malicious injury to another person or the person's property may remain after bankruptcy. And sometimes liens on real property arising from court judgments remain after bankruptcy. Suing someone who declares bankruptcy is covered in Chapter 4.

How Much Should You Sue For?

Okay -- you have a reasonable chance of winning and you think you can collect. Now the question is, "How much should you sue for?" You can sue in the limited jurisdiction division for anywhere from $1 to $25,000. Before you pick an exact amount, take a look at what types of money damages are routinely awarded in breach of contract and tort cases.

If your case is under $7,500, you are almost always better off in Small Claims Court, discussed in Chapter 1. Everybody's Guide to Small Claims Court, by Ralph Warner (Nolo), can guide you through the process.

Tort Cases

If your lawsuit is based on a tort (intentional or careless behavior directly resulting in injury or damage to you or your property), you may be able to recover for the following kinds of damages:

Property damage. Legally, property falls into two categories: real property (land and buildings) and personal property (everything else). When I speak of property, I mean both real and personal. You can collect the cost of repairing an item of property, but if the repair exceeds the market value, you get only the market value. The market value is the property's worth just before it was damaged, not its replacement cost. For instance, if your car is totaled, use the car's value as reflected in the Edmunds guide (www.Edmunds.com) or the Kelley Blue Book (www.kbb.com), not what it is going to cost you to replace it.

Medical bills. You can sue both for costs you've already incurred and for those you expect to incur in the future for medical treatment for both physical and emotional injuries. These costs might include ambulance charges, emergency room service, hospital costs, X-rays, chiropractors, orthopedists, plastic surgeons, and therapists who have helped you recover from your trauma. See "If Your Insurance Is Paying for Your Medical Bills," below.

Lost wages and benefits. The amount you seek should include compensation for income you didn't or won't receive as a result of the injury or damage. Be sure to include estimated future lost wages if you'll have to take more time off.

If you were paid through an insurance or sick leave plan, request compensation for the regular wages you missed. Insurance and sick leave payments are benefits you earn; they should not be a windfall to the defendant. Similarly, if you were forced to use up vacation time to recuperate, ask for wages during that period. But if you have a dream employer who ignored your absence and paid your regular wages while you missed work, don't ask to be compensated for the time you missed. If you're self-employed, you may need an accountant to help you figure out what you would have earned had you been able to work.

Another type of damages that will apply in a few cases is your loss of "earning capacity" in the future. If your injury will prevent you from being promoted to a better job, or if you now cannot do the job you used to do and must take a lower-paying job, you can sue for the difference between what you could have reasonably expected to earn preaccident, minus your expected, lower earnings, postaccident. (If you have a significant injury and hence sizable loss of earning capacity damages, chances are you'll be suing for much more than $25,000 and will have a lawyer representing you in the unlimited division of Superior Court.)

Pain and suffering. Money awarded for pain and suffering compensates you for your stiff back, the pain you feel when you hobble down the stairs, and your general discomfort. It also includes compensation for fright, nervousness, anxiety, and apprehension caused by the incident. Be sure to include both past pain and suffering and any you are likely to experience in the future.

A typical approach to calculating pain and suffering is to begin by multiplying your medical bills by a factor of three to five. If your pain and suffering is extreme or out the ordinary, increase it from there.

Example:
Nick's total medical bills were $4,000. To figure out his initial pain and suffering loss, he multiplies that amount by three. He didn't have any extraordinary pain and suffering, so he asks for $12,000 for this portion of his damages.

This formula is used because pain and suffering is usually loosely related to the amount of an injured person's medical expenses. Insurance companies deny that they use any such formula, but at least it gives you a place to start your bargaining. After a quick trip to an emergency room and one follow-up appointment with a doctor, most people won't experience much pain and suffering. But if you required an operation and physical therapy, your pain and suffering would likely be much greater.

Were you partially at fault? If you were injured or your property was damaged because of the defendant's act, but your carelessness contributed to the injury or damage, your recovery may be reduced proportionately under a legal doctrine known as "comparative negligence." Comparative negligence means that a person who was partially at fault gets charged for his or her share of the blame. For example, suppose Linda and Jason collided in a car accident. The judge rules for Linda, and finds that her damages -- auto repair, lost wages, medical bills, and pain and suffering -- total $10,000. The judge also finds that Jason was 75% responsible for the accident (he made an unsafe lane change) and that Linda was 25% responsible (she was driving too fast). Linda's recovery would be reduced to $7,500.

Breach of Contract Cases

If you're suing because the defendant breached a contract, the amount of your damages will likely depend on the type of contract involved. Because damages in a contract case are related directly to the contract itself, and what the defendant's breaking the agreement cost you, the damages are usually easier to determine. On the flip side, they're also more limited -- for example, you can't recover for pain and suffering for breach of a contract. Look at the breach of contract categories below and see which type most nearly matches yours.

Unpaid loans. If you lent someone money and he or she hasn't paid you back, you're entitled to the unpaid loan amount, plus any interest specified in the contract, not to exceed 10% per year. If you forgot to include interest in your contract, you can recover 10% per year from the time the loan was due, under Civil Code § 3289.

Example 1:
Wayne lent John $10,000. John signed a promissory note that said nothing about interest. John failed to pay Wayne. Wayne sued for $10,000 plus 10% per year interest from the time the money was due.

Example 2:
This time Wayne lent John $10,000 for two years at 8% interest. When John fails to pay Wayne back, Wayne sues for the $10,000 plus 8% interest from the time the money was loaned.

If the loan was to be paid in installments, you can sue on each installment as it becomes due or wait until all the installments are owed and sue then -- assuming the statute of limitations hasn't run on the earlier installments. If, however, your loan agreement has an acceleration clause -- a provision that if any payment is missed the full amount becomes due immediately -- you can "accelerate" the loan and sue on the full amount as soon as the borrower misses a single payment.

Example:
Missy loaned Nora $8,000 to be paid back at $200 per month. The agreement contains an acceleration clause -- that is, if Nora misses any payment, the balance amount becomes due immediately. Nora makes one payment and then misses several. Missy accelerates the loan and sues for the full balance plus interest.

Failure to provide a service. If you had a contract with someone to provide you a service, you can recover any damages that could have been reasonably predicted. You're certainly entitled to recover any money you've paid out. You can also recover any extra money you paid to get the services done elsewhere. In exchange, you must take reasonable steps to minimize your damages -- by choosing a reasonably priced substitute, for example, and by acting quickly.

Example 1:
Mac's bathtub pipes spring several leaks and soak his house. Mac calls a plumber and tells him about the extensive damage the water is causing. The plumber promises to be over within ten minutes. Mac tells him that if he can't make it right away, he will call someone else. The plumber tells Mac not to worry, but then takes 70 minutes to get there. Mac is entitled to any damage that occurred during the 60-minute period, but nothing else. If Mac let the leak go unrepaired for a week, his recovery would be limited to the damage incurred before he should have realized the plumber was not going to honor his commitment.

Example 2:
In August, Ann hired Ajax Roofing to repair her roof at a bargain rate of $4,000. Ajax promised to complete the work by October 1, when rain was expected. On September 25, Ajax calls to say it couldn't begin until the end of October. Ann hires Zeus Roofing at $5,000, to begin work on October 5. From October 1 until October 5 she puts a tarp over the holes in her roof. Her damages are the extra $1,000 she paid to Zeus and the cost of putting up the tarp.

Providing defective goods. If you receive defective goods, you can recover your costs to repair or replace the item, and any other damages reasonably foreseeable to the defendant, as long as you:

• didn't cause the damage by improper use, and
• follow reasonable terms of any warranty or agreement from the seller about returning the goods for credit or repair. When you buy goods, you often get a brochure telling you what to do if the goods are defective.

The law regarding these matters is covered in Chapter 4. Unless there is a brochure that says otherwise, the seller must repair or replace the item within a reasonable time. Otherwise, you're entitled to your costs of repair or replacement.