🤔
Contracts • Remedies for Unexcused Non-Performance
K#166
Legal Definition
If one party's expectation damages are too speculative and they cannot prove them with certainty, they may opt instead to recover damages based on their reasonable reliance of performance. Reliance damages seek to put the plaintiff in the same position they would have been had they never entered into the contract (e.g., recovering the cost of performance).
Plain English Explanation
Though contract breaches are common in the real world, it is more common for contracts to go as planned with no breaches. That's part of what makes a contract so great. It's getting a plan with predictable actions of parties in writing. As a result, when people form a contract, they often make other decisions, plans, and expenses as a result of relying on the contract to go as planned. If the contract does not go as planned, then the expenses incurred based on such reliance can be sought as damages. The goal is to make a legal time machine that places the party back in the position they were before the contract was formed.
Hypothetical
Hypo 1: Bob is planning a concert. He plans on hiring a famous band to play at his concert and will make money based on selling tickets, food, drinks, and merchandise. Bob decides to hire Sam's band, which is very popular locally. Bob offers Sam $500 to be his entertainment for the day. Sam agrees. Now that Bob has Sam locked-in to play, he pays a graphic designer $100 to design some fliers for his concert. Bob pays his local printer $200 to print the fliers. Bob pays a marketing team $300 to advertise the concert. Bob hires security for $100, and orders food and drink for $500. A week before the concert, Sam calls and says he broke his leg skiing and is unable to play the concert. Result: In reliance of Sam playing the concert, Bob spent $700 preparing for the concert. Bob is pretty sure he could have made $100,000 if Sam hadn't cancelled on him, but he has no evidence to support this projection. As such, his expectation damages of $100,000 are likely too speculative, but he could instead sue for $700 in reliance damages to make himself whole and put him back into a position he was in before he spent $700 in the concert.
Visual Aids
Related Concepts
Are damages recoverable when uncertain?
How do you calculate damages in a breach of a construction contract?
How do you calculate damages in a breach of an employment contract?
How do you calculate damages in the breach of a sale of land contract?
Under the UCC, what formula is used to determine a buyer's damages if a seller breaches and has not tendered any goods?
Under the UCC, what formula is used to determine a buyer's damages if a seller breaches and the buyer keeps the goods?
Under the UCC, what formula is used to determine a seller's damages if a buyer breaches and the buyer keeps the goods?
Under the UCC, what formula is used to determine a seller's damages if a buyer breaches and the seller has not tendered any goods?
What are avoidable damages?
What are consequential damages and when are they recoverable?
What are expectation damages?
What are incidental damages and when are they recoverable?
What are the monetary remedies for breach?
What are the non-monetary remedies for breach?
What is restitution?
What is specific performance?
When are covenants not to compete enforceable?
When are covenants not to compete enforceable in California?
When are liquidated damages appropriate?
When is specific performance unavailable as a remedy?
When may a buyer recover goods from a seller?
When may a seller reclaim goods from a buyer?
