Also known as: loss of the bargain · bargain loss · expectation damages · expectation interest
Written by attorneys · grounded in primary & secondary sources — see below
The contractual expectation interest that compensates an injured party by placing them in the position they would have occupied if the contract had been performed.
Park Merchandise delivered only one thousand units of inferior quality under an exclusive supply agreement with Pacific Retail. Pacific incurred rush premiums for substitutes and extra customer service costs during peak season. The shortfall diminished the value Pacific received compared with the promised five thousand conforming units.
Neil sought specific performance of an oral agreement for a prototype surgical robot after Maxwell withdrew. The robot had no market equivalent and Neil's rural practice depended on its unique capabilities. Monetary damages could not replicate the performance Neil bargained for.
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A defective turbine caused damage to the product itself on East River Steamship vessels. The owner sought recovery in tort for the resulting economic loss. The claim was treated as a warranty matter rather than a tort action.
The Nollans sought to build on their beachfront lot but faced a deed restriction requiring public access. The commission's condition affected the value of the development rights they expected to exercise. The dispute turned on whether the restriction diminished the benefit they bargained for in acquiring the property.
Loss of bargain measures damages by the position the injured party would have occupied if the contract had been performed. Reliance damages instead reimburse expenditures made in preparation for performance. The expectation measure therefore includes anticipated profits while the reliance measure does not.
Supporting sources
Loss of bargain damages are unavailable for negligent misrepresentation because that tort limits recovery to out-of-pocket and reliance losses. They remain available for intentional misrepresentation when the plaintiff proves pecuniary loss caused by the deceit. Product damage to the item itself is also treated as unrecoverable economic loss rather than tort damage.
Supporting sources
A party cannot recover damages for loss beyond the amount that the evidence permits to be established with reasonable certainty. The requirement excludes elements of loss that cannot be proved with reasonable certainty but does not bar recovery of the total loss when some components remain uncertain. Doubts are generally resolved against the party in breach.
Supporting sources
…allowed to build a significantly larger new home with garage on their lot. Finally, appellants can claim the disruption of no expectation interest, both because they have no right to exclude the public under state law, and because, even if they did, they had full advance notice that new development along the coast is conditioned on…