A breach of contract occasions potential damages traditionally measured in the form of three remedies: “expectation,” “restitution,” or “reliance.” The goal of the expectation remedy, which is the most common measure of damages for a breach of contract and is popularly said to confer the “benefit of the bargain,” is to put the non-breaching party in as good of a position as he or she would have been in had the breaching party performed the contract.
When a breaching party has defectively performed a contract, for instance, the non-breaching party can recover the cost of remedying the defective performance, i.e., the cost of completion. In a breach of contract lawsuit for the delivery of personal property at a fixed time and place, the proper measure of damages is the contract price subtracted by the market price at the place and time of delivery. By comparison, the proper measure of damages for the failure to complete a construction contract is the cost of completion subtracted by the amount that remains unpaid under the contract.
Restitution remedies are designed to prevent “unjust enrichment.” They represent the interest of a non-breaching party in recovering the value that was conferred upon the breaching party through the effort to perform a contract. In other words, restitution seeks to restore what was lost to the non-breaching party or to make the non-breaching party whole again.
Reliance remedies, finally, aim to put the non-breaching party in as good a position as he or she was in before the promise or agreement was made. Whereas expectation damages are “forward-looking” and consider what position the non-breaching party would have been in had the contract been performed, reliance damages are “backward-looking” and consider what position the non-breaching party would have been in had the contract never been contemplated.
These are not the only remedies available when a breach of contract occurs, but they are the most widely recognized and commonly implemented of such remedies.