Expectation damages

Expectation damages are damages recoverable from a breach of contract by the non-breaching party . An award of expectation damages protects the injured party's interest in realizing the value of the expectancy that was created by the promise of the other party.

The purpose of expectation damages is to put the non-breaching party in the position it would have occupied had the contract been fulfilled. Expectation damages can be contrasted to reliance damages and restitution damages, which are remedies that address other types of interests of parties involved in enforceable promises.

The default for expectation damages are monetary damages which are subject to limitations or exceptions (see below)

Expectation damages are measured by the diminution in value, coupled with consequential and incidental damages.

Measuring Expectation Damages

In expectation damages, the measure of damages is the difference between what was given and what was promised, along with consequential and incidental expenses minus any payments received from the breaching party and any costs saved as a result of the breach.[1] The proper amount is that which gives the non-breaching party the "benefit of the bargain." However, it is important to note that expectation damages are not punitive; its theoretical purpose is to place the injured, non-breaching party in the same position that they would have occupied had there been full performance of the contract.[2] In other words, it is the amount that makes the injured party indifferent to the breach.

Examples:

Potential Exceptions or Limitations

See also

References

  1. Bellgrove v Eldridge (1954) 90 CLR 613 AusLII
  2. Clark v Macourt [2013] HCA 56 AustLII
  3. Hadley v Baxendale [1854] 156 ER 145 Bailii
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