Expectation damages in Ontario for breach of contract
A lawyer can provide information about how a breach of contract lawsuit may be the legal remedy that makes a wronged party to an agreement whole again, potentially through expectation damages.
At our Ontario law firm, we advocate for people and businesses in breach of contract disputes. Skilled and creative negotiation with the other side can often resolve a dispute through a mutually acceptable settlement agreement. But sometimes when parties to a contract do not reach a negotiated agreement, one of them files a breach of contract lawsuit.
If a court finds in contract litigation that a party breached the agreement, what kinds of money damages or other forms of relief might be available for the plaintiff who was harmed by the breach? In most instances, the court looks first at expectation damages.
Nature of expectation damages
Expectation damages are a type of compensatory-damage award meant to reimburse the harmed party for loss caused by breach of contract. When a party fails to perform their part of the bargain, bringing loss to the other party – usually financial – the legal remedy is most often for the court to order the breaching party to pay expectation damages to the plaintiff.
Expectation damages are an amount of money equal to the value the wronged party would have received if the breaching party had performed the terms of the agreement.
Depending on the nature of the contract and the breach, the court may add compound interest or another type of interest to the expectation-damages award to reimburse for the lost value of the use of money over time.
Other potential legal remedies for broken contracts
In circumstances where it is difficult to determine the amount of expectation damages or something else about the contract or nature of the breach is not consistent with the purpose of expectation damages, the court may grant other, less common types of legal remedies:
- Reliance damages aim to restore the plaintiff to the position they would have been in had they never agreed to the contract.
- Liquidated damages are in a preset amount to which the parties agreed as a binding term of the contract.
- Mental-distress damages are only available for a broken contract for which the parties had reasonably contemplated that its performance would bring peace of mind or mental relief to a party. Mere frustration over a broken contract does not rise to the level of mental distress that is reimbursable.
- Aggravated damages can compensate for distress from behavior during a breach that was especially egregious or malicious.
- Restitutionary damages order the defending party to reimburse or return to the plaintiff any advantage or gain received from the plaintiff, such as a down payment on a purchase or service that never materialized because of the breach.
- Nominal damages are usually $1.00 or slightly higher, a trivial amount that acknowledges that a breach occurred, but more substantial damages are not possible or appropriate possibly because the plaintiff cannot prove actual damages.
- Punitive damages punish the breaching party for particularly outrageous behavior as well as to deter others from similar actions.
- Specific performance is a court order that the defendant perform the terms of the breached contract.
- And other legal remedies
This article begins a discussion of expectation damages and other potential legal remedies for breach of contract. This area of contract law is multifaceted and complex, and a lawyer can provide information, guidance and representation in a breach of contract case,