What is Benefit of the Bargain Damages?
This pertains to all damages that a breaching party to a contract must pay to the injured party. Generally it will be equal to what the aggrieved party would have received, including profits, if the contract had been fully performed.
Examples and Case Studies
Real-Life Example
Imagine a scenario where a contractor, Alex, agrees to build a custom home for a client, Emily, for $500,000. If Alex breaches the contract by failing to complete the home, Emily may be entitled to benefit of the bargain damages. These damages would include the additional costs Emily incurs to hire another contractor to complete the home, as well as any lost profits or benefits she would have received had Alex fully performed the contract.
Case Study: Smith v. Jones
In the case of Smith v. Jones, Smith contracted with Jones to purchase a rare antique for $50,000. Jones breached the contract by selling the antique to another buyer for a higher price. Smith sued for benefit of the bargain damages, seeking the difference between the contract price and the market value of the antique at the time of the breach. The court awarded Smith $20,000, reflecting the profit Smith would have made if the contract had been honored.
Case Study: Johnson v. Green Enterprises
In Johnson v. Green Enterprises, Johnson entered into a contract with Green Enterprises to supply custom-made furniture for his new hotel. Green Enterprises failed to deliver the furniture on time, causing Johnson to lose potential bookings and revenue. Johnson sued for benefit of the bargain damages, which included the lost profits from the unbooked rooms and the additional costs incurred to expedite the delivery of alternative furniture. The court awarded Johnson the amount he would have earned if the contract had been fully performed by Green Enterprises.
Legal Requirements
| Requirement | Description |
|---|---|
| Proven Breach | The breaching party must have failed to fulfill their contractual obligations. |
| Expectation Damages | Damages are calculated based on what the aggrieved party would have received if the contract had been fully performed. |
| Inclusion of Profits | Includes any profits or benefits the injured party would have gained from full performance. |
| Evidence of Loss | The injured party must provide evidence of the losses incurred due to the breach. |
Common Issues and Disputes
Common issues in cases involving benefit of the bargain damages often include:
- Determining the exact amount of damages the injured party is entitled to receive.
- Assessing the profits or benefits the injured party would have gained from full performance.
- Providing sufficient evidence to support the claimed damages.
- Resolving disputes over the calculation of expectation damages and lost profits.
Key Points
- Benefit of the bargain damages compensate the injured party for what they would have received if the contract had been fully performed.
- These damages include both direct losses and any anticipated profits.
- The injured party must provide evidence of the breach and the resulting losses.
- Courts calculate these damages to place the injured party in the position they would have been in if the contract had been fulfilled.
Further Reading
For more detailed information, see our related Contracts terms:
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