Reliance vs Expectation Damages

Trying to work out the distinction between reliance and expectation damages as a means of compensation in the event of a breach of contract (for Contracts, clearly):

Reliance Damages: a form of compensation that seeks to return the plaintiff to a null financial state, equal to what s/he had prior to the contract. In this case, the plaintiff acted as if the contract had gone through (made a purchase, sold something, etc.), and lost that gain when the contract was breached.

It’s as if I made a contract with the 49ers to tank this season so we could replace Alex Smith with Andrew Luck. Because I assume next season I will be watching Andrew Luck, I go out and purchase a custom-made Andrew Luck Niners jersey and turn my apartment into a creepy, expensive Niners-Luck shrine. When the team breaches the contract by playing just well enough to be depressingly mediocre and earn god-damn Alex Smith another 1 year contract, I should be compensated for the actions I undertook assuming the contract would be fulfilled, and receive damages equal to the loss I suffered as a result of my predictive actions.

Expectation Damages: a form of compensation that reverses the timeline; instead of compensating me for what I was at prior to the contract, I get compensation for whatever value I would have received had the contract been fulfilled in the future. This can include expectations on my part of future profits, and can sometimes incorporate personal value as well.

Using the same contract as before (the Niners will tank the season, kick Alex Smith’s passive-aggressive behind to the proverbial curb [I’m hoping for Arena Football or something], and draft Andrew Luck), in this case, I am planning on the Niners becoming much, much more popular with an actually competent QB leading the team, and so I go out and purchase season tickets, hoping to sell some of them and make a tidy profit. When the team breaches the contract by playing just well enough to think it wise to bring back the Alex Smith water torture (and undoubtedly draft some disappointing D-lineman), under this compensation system I would receive damages equal to the potential value of the tickets I had planned on selling. Furthermore, because it pains me greatly in my heart to see the Niners horrible yet again, I can seek further damages since the team has sentimental value to me.

I think that’s how it works, anyway. Amazing how much simpler things seem when put in the context of Alex Smith hate.

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3 Responses to Reliance vs Expectation Damages

  1. Pingback: Hilarity | Bob Loblaw's Law Blog

  2. Tommy Zinger says:

    Lol, awesome. And congratulations on the burst-to-the-scene of Colin Kaepernick who should provide you with a talented QB for years to come. And Alex Smith seems to be on a team that better matches his talent level as well.

  3. Isela says:

    This was really helpful and I will certainly remember the examples come test day!

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