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

Victoria University of Wellington Legal Research Paper No. 123/2019

25 Pages Posted: 20 Nov 2019 Last revised: 13 Dec 2019

See all articles by David McLauchlan

David McLauchlan

Victoria University of Wellington - Faculty of Law

Date Written: November 18, 2019

Abstract

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

McLauchlan, David, The Limitations on 'Reliance' Damages for Breach of Contract (November 18, 2019). David Campbell and Roger Halson (eds) Research Handbook on Remedies in Private Law (Edward Elgar Publishing, 2019) 86; Victoria University of Wellington Legal Research Paper No. 123/2019. Available at SSRN: https://ssrn.com/abstract=3489538

David McLauchlan (Contact Author)

Victoria University of Wellington - Faculty of Law ( email )

PO Box 600
Wellington, 6140
New Zealand

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
53
Abstract Views
241
rank
392,053
PlumX Metrics