Also known as: expectation interests · expectancy interest · expectancy interests · expectation damages · expectancy damages
Written by attorneys · grounded in primary & secondary sources — see below
The interest of a nonbreaching party in being put in the position that would have resulted if the contract had been performed. This measure awards damages equal to the benefit of the bargain, including the loss in value of the promised performance plus any other losses caused by the breach, reduced by costs avoided.
Pacific Retail contracted with Park Merchandise for 5,000 conforming units at a fixed price to anchor its spring collection. Park delivered only 1,000 inferior units. Pacific recovered damages measured by its expectation interest, placing it in the position it would have occupied had Park performed by delivering the full quantity of conforming goods.
Neil agreed to buy a one-of-a-kind surgical robot from Maxwell for use in his rural medical practice. Maxwell refused to deliver. Because monetary damages could not adequately protect Neil's expectation interest in obtaining the unique prototype, the court ordered specific performance of the transfer.
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East River Steamship purchased turbines from Transamerica Delaval for its ships. The turbines malfunctioned, causing only economic loss to the buyer. Contract law governed the claim because the expectation interest in the turbines' performance was protected through warranty remedies rather than tort.
Damages based on the expectation interest equal the loss in value to the injured party of the other party's performance plus any other loss caused by the breach, reduced by costs avoided and by any loss the injured party could have avoided without undue risk.
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Specific performance or an injunction will not be ordered if damages would be adequate to protect the expectation interest of the injured party.
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Yes, provided the lost profits can be established with reasonable certainty. The requirement of certainty excludes only those elements of loss that cannot be proved with reasonable certainty, and doubts are resolved against the party in breach.
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The expectation interest places the injured party in the position it would have occupied had the contract been performed. The reliance interest reimburses loss caused by reliance on the contract by placing the injured party in the position it would have occupied had the contract never been made.
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…damages are analogous to reliance damages, which are awarded in contract when there is particular difficulty in measuring the expectation interest.