Contract Law: Expectation Damages
Expectation damages are designed to compensate the injured party for the benefit he would have received had the contract not been breached, minus any amount he would have spent in performance of the contract. Such damages must be foreseeable, reasonably mitigated, and proven with certainty. Damages can be measured by the contract price, loss in value of a property, or loss in profits.
Restatements 2d of Contracts, § 347 states:
Subject to limitations…[T]he injured party has a right to damages based on his expectation interest as measured by: (a) the loss in value to him of the other party’s performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform.
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