Black-letter propositions
- 01
Expectation equals loss in value plus incidental and consequential loss minus costs and loss avoided.
- 02
Consequential loss must have been foreseeable at contracting through ordinary course or special notice.
- 03
Lost profits require reasonable certainty, not mathematical precision.
- 04
The injured party must take reasonable mitigation steps but need not assume undue risk or humiliation.
- 05
Reliance reimburses foreseeable wasted expenditure, potentially reduced by loss the breacher proves would have occurred.
- 06
Restitution measures unjust enrichment and may be available to an injured party and sometimes a breacher less damages.
Use this attack sequence under time
Frame the issue
Choose protected interest.
Resolve the next checkpoint
Calculate baseline and each addition or subtraction.
Resolve the next checkpoint
Apply causation, foreseeability, certainty, and mitigation.
Resolve the next checkpoint
Avoid double recovery.
Finish the conclusion
Consider restitution and agreed remedies.
Common wrong turns
- Punitive damages ordinarily are unavailable for pure breach.
- Emotional-distress damages are exceptional.
- Mitigation limits recovery; it does not create an affirmative claim against the injured party.
Worked example
A carrier is told before contracting that delay will shut down the buyer's only factory, then delivers late, causing proven lost production.
The specially communicated shutdown loss may be foreseeable consequential damage if causation, certainty, and reasonable mitigation are shown.
Practice this topic
The three interests
Cornell describes expectation damages as damages intended to put the non-breaching party in as good a position as if the breaching party had fully performed, calculated as the difference between what was given and what was promised plus consequential and incidental costs. Reliance damages compensate a promisee for relying on a promise, typically in a breach of contract or promissory estoppel claim. Restitution is a remedy most often associated with unjust enrichment, where recovery is measured by the defendant's gain rather than the plaintiff's loss.
Choose the measure by asking which interest the plaintiff is protecting: the value of the bargain, the cost of reliance, or the defendant's benefit.
UCC damages formulas
UCC 2-712 lets a buyer cover by a good-faith, reasonable substitute purchase without unreasonable delay and recover the difference between the cost of cover and the contract price, plus incidental or consequential damages, less expenses saved. Section 2-713 measures damages for non-delivery as the difference between market price when the buyer learned of the breach and the contract price. Section 2-714 measures breach of warranty on accepted goods as the difference in value at acceptance between the goods as accepted and as warranted.
UCC 2-708(1) measures a seller's damages for non-acceptance as the difference between market price and the unpaid contract price plus incidental damages, less expenses saved, and 2-708(2) allows lost profit if that measure is inadequate. Section 2-715 defines incidental and consequential damages.
Frequently asked questions
What is the controlling rule for expectation, reliance, restitution, and limitations?+
Expectation puts the injured party in the performance position but only for losses caused, foreseeable at formation, reasonably certain, and not reasonably avoidable.
How should I analyze expectation, reliance, restitution, and limitations on the bar exam?+
Choose protected interest. Calculate baseline and each addition or subtraction. Apply causation, foreseeability, certainty, and mitigation. Avoid double recovery. Consider restitution and agreed remedies.
What do expectation damages do?+
Put the non-breaching party in as good a position as if the breaching party had fully performed, according to Cornell's summary.
What is cover under UCC 2-712?+
A reasonable purchase of substitute goods made in good faith and without unreasonable delay, with damages measured by the cost of cover minus the contract price plus incidental or consequential damages.
How are buyer's damages for non-delivery measured?+
The difference between the market price when the buyer learned of the breach and the contract price, plus incidental and consequential damages, less expenses saved, under UCC 2-713.
How are damages for breach of warranty measured?+
The difference at the time and place of acceptance between the value of the goods accepted and the value they would have had if as warranted, under UCC 2-714(2).
When may a seller recover lost profit?+
When the market-price measure in 2-708(1) is inadequate to put the seller in as good a position as performance would have done, under UCC 2-708(2).