Also known as: reliance damages · reliance measure · reliance interest
Written by attorneys · grounded in primary & secondary sources — see below
A measure of contract damages that reimburses the injured party for loss caused by reliance on the contract by placing that party in as good a position as if the contract had not been made. Recovery includes expenditures made in preparation for performance or in performance. The breaching party may reduce the award by proving with reasonable certainty any loss the injured party would have suffered had the contract been performed.
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Highland Publishing signed a deal with Pioneer Publishing to develop and air a news series. Highland hired journalists, rented studio space, and filmed three pilots before Pioneer cancelled. Highland recovers its salary, rent, and production expenditures as reliance damages because those sums were spent in preparation for performance.
Pioneer Publishing cancelled the series after Highland incurred substantial costs. Pioneer proves with reasonable certainty that advertising revenue would have fallen short of expenses. The court reduces Highland's reliance recovery by the amount of that proven net loss.
Riverside Physicians Group signed a ten-year lease with Harborview Property Fund and spent several hundred thousand dollars on lead-lined walls and specialized plumbing. Harborview terminated the lease to sell the building vacant. Riverside recovers the build-out expenditures as reliance damages because they were reasonable, foreseeable, and incurred before the breach.
Clayton agreed orally with Pine Studio to produce a two-year investigative series and spent four months traveling and conducting interviews before Pine Studio breached. Clayton recovers salary and travel costs as reliance damages because those sums were spent in preparation for performance.
Lena Hospitality signed a fifteen-year lease with Orion to renovate a closed inn and planned substantial upfront expenditures. Before possession, a bank foreclosed and refused to honor the lease. Lena terminates and recovers reliance damages from Orion for costs incurred in preparing to perform.
Walter, an adjuster for Plains Coverage, extended a written settlement offer to Birch Indemnity that remained open for thirty days. Birch incurred appraisal expenses in reliance before Plains Coverage breached by repudiating the offer. Birch recovers those expenditures as reliance damages.
It protects the injured party's interest in being reimbursed for loss caused by reliance on the contract. The measure places the party in as good a position as if the contract had not been made.
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Section 349 permits recovery of expenditures made in preparation or performance. The breaching party may reduce the award by proving with reasonable certainty any loss the injured party would have suffered had the contract been performed.
…to justify no reliance claim. Even if reliance could be claimed on that unrealistic assumption, the argument might run, any reliance interest would be de minimis . This argument would be premised on the hypothesis that reproductive planning could take virtually immediate account of any sudden restoration of state authority to…
…gains has traditionally been viewed as less compelling than other property-related interests. Cf., e. g. , Fuller & Perdue, The Reliance Interest
…compensate the plaintiff for loss and return him to the position he occupied before the injury. Tort
…the law enforcement community may view the State’s version of the Belton rule as an entitlement does not establish the sort of reliance interest
…of stare decisis is reduced. See United States v. Gaudin , 515 U. S. 506, 521 (1995); Payne , 501 U. S., at 828. And any reliance interest
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Yes. The breaching party may prove with reasonable certainty that the injured party would have suffered a net loss had the contract been performed. The court then reduces or eliminates the reliance award by that amount.
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Yes. A party cannot recover damages beyond the amount established with reasonable certainty. Expenditures actually made are usually easier to prove with certainty than lost profits.
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Restitution is available when a party renders services or makes improvements in reliance on a contract later held unenforceable under the Statute of Frauds. Recovery is limited to the reasonable value of the benefit conferred and does not enforce the contract itself.
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