Also known as: reliance interest
Written by attorneys · grounded in primary & secondary sources — see below
A remedial interest that reimburses a promisee for loss caused by reliance on a contract by placing the promisee in as good a position as if the contract had not been made.
Highland Publishing signed a deal with Pioneer to produce news pilots and immediately hired journalists plus rented studio space. Pioneer cancelled before any episodes aired. Highland recovered its salary and rent outlays because those expenditures placed it in the position it would have occupied had the contract never existed.
Raven Logistics contracted to supply parts for a new warehouse but the owner breached after Raven had purchased materials and scheduled crews. Raven sought its outlays as reliance damages. The owner proved with reasonable certainty that the project would have lost money, so the court reduced the award by that amount.
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Apex Manufacturing contracted to build custom engines for Delta Trucking and immediately bought specialized parts plus hired extra machinists. Delta cancelled the order before production began. Apex recovered its parts and labor outlays because those expenditures placed it in the position it would have occupied had the contract never existed.
Metro Builders contracted to construct a warehouse for Summit Logistics and promptly paid architects plus secured permits. Summit repudiated before groundbreaking. Metro recovered its design and permitting costs because those outlays placed it in the position it would have occupied had the contract never existed.
Coastal Fisheries contracted to supply seafood to a resort chain but the buyer breached after Coastal had purchased vessels and hired crews. Coastal sought its outlays as reliance damages. The buyer proved with reasonable certainty that the venture would have lost money, so the court reduced the award by that amount.
The reliance interest reimburses expenditures made because of the contract and returns the injured party to the position it would have occupied had the contract never been made. The expectation interest instead awards the benefit of the bargain that full performance would have provided.
A breaching party may reduce the award by proving with reasonable certainty that the injured party would have suffered a net loss even if the contract had been performed. The reduction prevents the injured party from obtaining a windfall greater than its actual position.
No. Reliance damages focus on actual expenditures made in preparation or performance. Those outlays are usually provable with reasonable certainty even when lost profits remain too speculative to recover under an expectation theory.
Yes. Courts consider whether parties have made substantial investments or altered their conduct in reliance on an established rule. When those reliance interests are concrete and would be disrupted by a change, they weigh against overruling the precedent.
…test that has proved unworkable. Roe short-circuited democratic processes and had serious consequences for legal doctrine. Reliance interests identified in Casey were speculative and intangible; the kinds of concrete reliance implicated in property and contract cases are absent here. Stare decisis therefore does not counsel…