Part IV Termination and Affirmation, 10 Damages on Termination

Subject(s):

Termination/unwinding of contract — Termination and damages

This chapter focuses on damages on termination for breach of contract. Though there may be other measures used, ‘loss of bargain’ damages is the normal rule in cases of termination. The purpose of loss of bargain damages is to give the injured party the market value of the benefit of which he has been deprived through the breach. The phrase ‘loss of bargain’ can be used in two different senses. The first, and more general sense, is to denote the loss suffered by the claimant through being deprived of the benefit of the promise broken. However, the term is also used more precisely to denote the loss of the benefits of future performance of obligations released following discharge or termination. The chapter then examines when such damages are available following termination and how loss of bargain damages are calculated in such cases. Though most cases of termination will lead to loss of bargain damages, there may be situations where this is not an appropriate measure. These situations include the recovery of reliance loss and the recovery for non-pecuniary losses.