Basic Types of Damages in Business Contract Litigation Disputes
Expectation damages in a contract dispute are those damages which a plaintiff sustains not based on the injury, but because of the loss of some future, expected stream of income. Expectation damages are awarded to a party harmed by breach of a contract, provided that those damages can be calculated with reasonable certainty. Expert testimony, if well supported and thorough, is an acceptable way of determining expectation damages.
Reliance damages are awarded for losses suffered in reasonable reliance on a promise. Reliance damages are calculated by asking what it would take to restore the injured party to the economic position occupied before the party acted in reasonable reliance on the promise. If one party fails to respect their obligation, then the other party may suffer an economic harm. Reliance damages compensate the harmed party for the amount of damages they suffered for acting in reliance on the other party’s contractual obligations.
Restitution damages restore the benefit to have been conferred to the non-breaching party. Simply, the plaintiff will get the value of whatever was conferred to the defendant when there was a contract. The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. There are two general limits to restitution recovery. First, a complete breach of contract is needed. Second, the damages will be capped at the contract price if the restitution damages exceed it.