Chapter Summary

If a contract is breached, the innocent party may be entitled to a variety of remedies. If the breach is
serious, the innocent party may be allowed to discharge the contract. Whether or not a contract is
discharged for breach, the innocent party may be entitled to damages. Expectation damages allow the
innocent party to recover the monetary value of the benefit that they expected to receive under the
contract. The calculation of expectation damages is complicated if the defendant was entitled to
perform in various ways, or if the plaintiff claims the cost of cure or the value of intangible losses.
Expectation damages are subject to two important restrictions: remoteness and mitigation. Instead of
expectation damages, the innocent party may be entitled to reliance damages, which allow them to
recover the monetary value of expenses and opportunities that they wasted in reliance upon the
contract. Reliance damages are available only to the extent that the contract was not unprofitable. In
exceptional circumstances, a court may impose an account of profits in order to compel the defendant
to disgorge a benefit that they acquired in breach of contract. The courts will enforce a contractual term
regarding liquidated damages, but they will not enforce a penalty. If the innocent party did not suffer
any loss as a result of a breach, the court may award nominal damages. Punitive damages are
occasionally awarded to punish the defendant and discourage other people from behaving badly.
Equitable remedies are sometimes available for a breach of contract. Specific performance occurs when
the court orders the defendant to fulfill a contractual obligation to do something. An injunction occurs
when the court orders the defendant to refrain from doing something that is prohibited by the contract.
Specific performance and injunctions are subject to special limitations. Even if a contract has been
discharged for breach, an exclusion clause contained in that contract may continue to limit the
defendant's liability. In some situations, it may be possible to sue for unjust enrichment rather than
breach of contract. The cause of action in unjust enrichment requires proof that (i) the defendant
received an enrichment, (ii) the plaintiff suffered a corresponding deprivation, and (iii) there was an
absence of any juristic reason for the defendant's enrichment. The remedy for unjust enrichment is
always restitution.