Remedies

Question 1

What are expectation damages?

Answer 1

· (1) Expectation damages - the default for damages (expectation interest)
o — they are forward looking and would put you in a position if the other party fulfilled their promise and had not breached the contract.
o The expectancy principle is the controlling normative framework and the ordinary measure of damages in contract law.
o They fall within two sub-types that are recoverable:
§ (1) claims for lost profits
· Example: if I agree to buy a widget for $100, and I can show on a balance of probabilities that I was going to resell that widget for $200, then my claim is for $200. Thus, you are putting the plaintiff where they would be in regards to profits had the wrongdoer had performed.
§ (2) replacement costs
· Example: if I agree to buy a widget for $100, and you don’t give me the widget. Then next year the widget costs $200, the value of that widget has increased. Then the claim for expectancy principles to be put in the position had you performed is actually to give the increased cost of the widget.
o Rationale:
§ the innocent party (the victim of the breach) should be put in the same position that they would be in if the contract had been performed, by giving the innocent party the monetary value of the breaching party’s performance of the contract.
§ It encourages parties to respect fidelity of the contractual bargain by motivating them to perform your contractual obligations. It speaks to the sanctity of contract.

Question 2

McCrae v Common Wealth Disposal Comm. (Reliance Measure of Damages as an Alternative)

Answer 2

TEST: in order to qualify for reliance damages as an alternative to expectation damages, you must show that:
1) You have to show expectation damages were not available (you cannot quantify the damages)
2) Factually show that you have expended money on reliance of the contract
o 1) you in fact spent money on the reliance of the contract where the money that you spent was causally connected to your performance of the contract, and
o 2) the money you spent was reasonable
3) The money must be ‘wasted’ in the sense that it is nonrecoverable with no continuing benefit.
o Costs that cannot be recovered:
1) money you would have spent regardless of the contract being signed (typically on capital assets)
2) what you spent still retains value for the money you spent
Lost chance to profit:
- Lost profit is compensable under reliance damages under this heading (as well as expectation damages )
- still need an evidential foundation to claim
- Lost profits relate to: claims for a change to profit elsewhere, had the party not spent all of X time performing contract Y

• The most that you can get out of reliance damages is determined by hypothetical or actual expectation damages.

Question 3

Bowlay Logging Ltd v Domtar Ltd (Reliance Damages - Limit to Quantum of Damages)

Answer 3

• Expectancy principle caps reliance damages based on the amount of money that you would have made off the contract, because the plaintiff should not be put in a reliance position with reliance damages that are better than he would be in if the other side actually performed.
  o Reliance damages are an alternative to expectation damages, but they can never exceed the expectation damages (in its quantifiable limit).
• Broadly, if the contract is a money loser, you cannot turn to reliance damages to get money that would exceed the amount that you would get if the other side actually performed. AKA - you don’t get compensated for making a bad bargain.
• Refines McCrae: you can’t claim capital investments or start-up costs before the contract, only things that are wasted during the contract.
  In Principle, if you bought capital investments that you bought and would have bought anyway, then you cannot claim them McCrae. That is true. But what you can claim is the depreciation of those assets Bowlay.

Question 4

Sunshine Vacation Villas Ltd v Governor and Company of Adventures of England Trading Into Hudson’s Bay (Reliance and Expectation Interest Are Alternatives)

Answer 4

• Reliance damages are alternatives to expectation damages. You cannot have both, or else you would be getting double recovery.
  Expectations is what you would go for ordinarily, while reliance damages are only exceptional for a McCrae type situation.

Question 5

Attorney General v. Blake (Restitution Measure of Damages)

Answer 5

• In order to qualify for Restitutionary damages (gain based relief): the circumstances must be exceptional and all other remedies must be inadequate on the facts.
  Expectation damages and reliance damages would be inadequate when the innocent party has a continuing legitimate interest in preventing the continuing profit making of the wrongdoer who breached the contract.