The measure covers costs incurred in preparing to perform or performing, including expenses wasted by the breach. It is available where expectation damages cannot be proven with certainty.
Recovery may be reduced by losses the plaintiff would have sustained anyway.
Alternative Names:
Reliance Interest|Out-of-Pocket Damages
Why it Matters?
The losing contract limitation is the significant defense, since a plaintiff that would have lost money had the contract been performed cannot use reliance damages to escape a bad bargain, and the defendant may prove the shortfall to reduce recovery. That defense requires establishing what the plaintiff's position would have been on full performance. Reliance is also the standard measure in promissory estoppel, where expectation recovery is frequently unavailable.
Frequently Confused with
Related terms
Frequently asked questions
Can reliance damages escape a losing contract?
When is reliance the preferred measure?
