Written by attorneys · grounded in primary & secondary sources — see below
Damages awarded to the recipient of a fraudulent misrepresentation in a business transaction beyond out-of-pocket loss. These damages are granted when proved with reasonable certainty to provide the benefit of the contract with the maker.
Sources & Authorities
How it applies
Common Examples
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Fraudulent Truck Sale Recovery
Midwest Freight Co. purchased ten used trucks from Atlas Truck Sales for $500,000 after relying on forged maintenance records. The trucks were worth only $350,000. Midwest incurred extra fuel and repair costs plus lost shipping contracts because the vehicles proved unreliable. The court awarded Midwest the $150,000 value differential plus the additional reliance losses to reflect the true economic position the buyer would have occupied under the misrepresented terms.
Insurance Misrepresentation Claim
Audrey Ashton purchased a life insurance policy from Pacific Mutual after the agent misrepresented the policy's cash-value growth rate. When the actual returns fell short, Audrey proved with reasonable certainty the additional amount needed to place her in the position the contract had promised. The court included that sum in the damages award beyond her out-of-pocket premium payments.
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Uniform Acts
Restatements
Dictionaries
Pacific Mutual Life Ins. Co. v. Haslip499 U.S. 1, 36 (1991)
Railroad Bond Penalty Dispute
Aaron Adams obtained a judgment against Burlington Northern Railroad and posted a supersedeas bond to stay execution. After the appellate court affirmed the judgment, the statute required the railroad to pay the affirmed amount plus an additional ten percent. The court treated the ten-percent increment as added damages that compensated Adams for the delay caused by the appeal.
Burlington Northern Railroad Co. v. Woods480 U.S. 1, 4–5 (1987)
Bankruptcy Counterclaim Award
Alfred Ashford asserted a state-law tort claim against a bankruptcy estate. After the bankruptcy court entered judgment, the district court added damages measured by the benefit Ashford would have received under the underlying contract had the misrepresentation not occurred. The added component was upheld because it was proved with reasonable certainty and did not exceed the scope of the original transaction.
Stern v. Marshall564 U.S. 462, 131 S. Ct. 2594, 180 L. Ed. 2d 475 (2011)
Data Broker Fraud Recovery
Adrian Aguilar purchased a credit-monitoring service from TransUnion after the company misrepresented the accuracy of its reports. When inaccuracies caused lost employment opportunities, Aguilar proved the additional sum required to restore the economic benefit the contract had promised. The court awarded that amount in addition to out-of-pocket subscription fees.
TransUnion LLC v. Ramirez141 S. Ct. 2190 (2021)
Common questions
Frequently Asked
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How do added damages differ from ordinary out-of-pocket recovery in fraud cases?+
Added damages supply the benefit of the contract when the plaintiff proves with reasonable certainty the amount needed to place the recipient in the position promised by the maker. They are awarded only after the value differential and other reliance losses are calculated and only when the additional sum is established with reasonable certainty.
Supporting sources
Can a plaintiff recover added damages without proving the benefit-of-the-bargain amount with reasonable certainty?+
No. The rule requires that the additional amount be proved with reasonable certainty before it may be awarded. Without that proof the court limits recovery to the out-of-pocket loss and other consequential pecuniary harm that is established.
Supporting sources
Does the availability of added damages turn on whether the transaction is a business deal?+
Yes. The rule applies specifically to fraudulent misrepresentations made in business transactions. In non-business settings the plaintiff is ordinarily limited to out-of-pocket and reliance losses without the further benefit-of-the-contract component.
Supporting sources
480 U.S. 1, 4–5 (1987)Civil Procedure
…interposed for delay, Montgomery Light & Water Power Co. v. Thombs , 204 Ala. 678, 684, 87 So. 205, 211 (1920), and to provide “additional damages” as compensation to the appellees for having to suffer the ordeal of defending the judgments on appeal. Birmingham v. Bowen , 254 Ala. 41, 46-47, 47 So. 2d 174, 179-180 (1950). Petitioner…