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Compensatory damages

• basic remedy of a contract - an award of damages that gives the injured party the financial equivalent of performance
• formula for damages in sale of goods: the disappointed buyer is entitled both to the difference between contract price and market price and to the cost of finding a new source of supply
• damages rules often come from tort law
• rule of avoidable consequences: the principle that an injured party cannot collect those damages it might have avoided by reasonable action on its part after it knew of the breach
• if the injured plaintiff saved any money by not being required to complete its performance of the contract, damages must be reduced by that amount

Section 344 Restatement:

Three interests:

1. expectation interest - benefit of bargain
2. reliance interest - interest in being reimbursed for loss caused by reliance on the contract
3. restitution interest - interest in having restored to him any benefit he has conferred on the other party.

these interests are not inflexible limits on relief, and it is possible that relief may not correspond precisely to any of these interests. . .

Section 347 Restatement:

Measure of Damages in General

Injured party had a right to damages based on his expectation interest as measured by

1. loss in the value to him of the other party's performance caused by its failure or deficiency
2. any other loss including incidental or consequential loss
3. any cost or other loss that he has avoided by not having to perform

Damages are normally based on expectation interest.

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