The Limitations on 'Reliance' Damages for Breach of Contract
David Campbell and Roger Halson (eds) Research Handbook on Remedies in Private Law (Edward Elgar Publishing, 2019) 86
25 Pages Posted: 20 Nov 2019 Last revised: 13 Dec 2019
Date Written: November 18, 2019
This chapter discusses some contentious issues relating to the recovery of so-called ‘reliance damages’ in an action for breach of contract. Does the commonly expressed ‘presumption of recoupment’ relating to expenditure incurred by the claimant in performing, or preparing to perform, the contract impose the full legal burden or merely an evidential burden on the defendant of proving that the expenditure would not have been recovered? Assuming that the former is correct, should the ability of the defendant to rebut the presumption be affected by the existence of foreseeable consequential benefits that the claimant expected or hoped to gain from performance of the contract? Does the presumption extend to all types of expenditure incurred in reliance on the contract? Should account be taken of contingencies that, if they had eventuated, would have enabled the defendant to escape or reduce liability in damages? And are damages for both wasted expenditure and loss profits recoverable in a case where the claimant is able to establish that performance by the defendant would have resulted in a net gain.
Keywords: reliance damages, presumption of recoupment, breach of contract, damages
JEL Classification: K12
Suggested Citation: Suggested Citation