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Remedies β’ Contract - Legal Remedies
REM#040
Legal Definition
Expectation damages represent the benefit the plaintiff expected to receive had the contract been performed as planned.
Plain English Explanation
Expectation damages are a type of compensation given to someone when a contract isn't fulfilled as promised. It's like making up for the benefits or profits they were expecting to get if everything had gone according to plan. This rule exists to ensure that if someone doesn't do what they promised in a contract, the other person can still get the value of what they were expecting.
Hypothetical
Hypo 1: Bob is a farmer. Sam enters into a contract with Bob to purchase 100 bushels of oranges at $5 per bushel, with the current market value being $10 per bushel. Bob decides to not deliver Sam any oranges as agreed. Result: Sam had an expectation of selling 100 bushels of oranges for the market rate of $10 per bushel, meaning Sam can sue Bob for damages. The court would calculate Sam's expectation damages by subtracting the price Sam paid ($500) from the value Sam expected to receive ($1,000), resulting in $500 of damages.
Hypo 2: Bob agrees to lease his commercial space to Sam for a new coffee shop. Sam invests in advertising and announces the grand opening. However, Bob later decides to lease the space to someone else. Sam expected to make $50,000 in revenue their first year and sues Bob for this amount. Result: Courts will likely feel this is too speculative. Yes, Sam may have been successful with their new coffee shop, and they may have done $50,000 in revenue, but many new businesses fail, or unknown events can cause disruption (like Covid), so in this case, because its more difficult to calculate what the damages would have actually been, Sam should seek another form of damages.
Hypo 2: Bob agrees to lease his commercial space to Sam for a new coffee shop. Sam invests in advertising and announces the grand opening. However, Bob later decides to lease the space to someone else. Sam expected to make $50,000 in revenue their first year and sues Bob for this amount. Result: Courts will likely feel this is too speculative. Yes, Sam may have been successful with their new coffee shop, and they may have done $50,000 in revenue, but many new businesses fail, or unknown events can cause disruption (like Covid), so in this case, because its more difficult to calculate what the damages would have actually been, Sam should seek another form of damages.
Visual Aids
Related Concepts
In assessing contract legal remedies, are nominal damages permitted?
In assessing contract legal remedies, are punitive damages permitted?
In assessing contract legal remedies, what are compensatory damages?
In assessing contract legal remedies, what are consequential damages?
In assessing contract legal remedies, what are incidental damages?
In assessing contract legal remedies, what are liquidated damages and when are they permissible?
What are legal remedies in contract?
What elements are required to prove legal remedies in contract?
What is the result of having a liquidated damages provision that is too excessive?