General Damages for Breach of Contract→ Reliance Measure

Question 1

Reliance Measure

Answer 1

Reliance Measure: Puts the non-breaching party in the position they would have been in had the promise/contract never been made.

• The non-breaching party is entitled to damages for the expenses incurred in the performance of or in preparation of the performance of the contract
  
  • unless the breaching party can prove they were operating at a loss, then they will not be able to retrieve those damages.

Question 2

Reliance Measure

The non-breaching party is entitled to damages for _____________.

Answer 2

The non-breaching party is entitled to damages for:

• the expenses incurred in the performance of OR
• in preparation of the performance of the contract

Question 3

Reliance Measure

Typically Used when _________.

Answer 3

1. Expectancy measure is not adequate due to lack of certainty
2. Where non-breaching party made a losing contract

• no profit going to be made, so expectancy would not be good
• not going to save you from losing contract –> subtracts your loss from the cost
• Breaching party has burden of proof for loss

Question 4

Reliance Measure

Pre-Contract Expenses

Answer 4

Pre-contract expenses are not typically awarded

• unless the breaching party can prove they were operating at a loss, then they will not be able to retrieve those damages.
• English Rule: Pre-contract expenses can be awarded if breaching party had reason to know that expenses would be likely to be wasted if the contract was broken