Legal Rules on Expectation and Reliance Loss in Damages Claims

Title: Legal Rules Governing Expectation Loss and Reliance Loss in Claims for Damages

Introduction:
Expectation loss and reliance loss are two distinct principles in contract law that govern the calculation of damages in a claim for breach of contract. The legal rules surrounding these concepts aim to compensate the claimant for the losses suffered as a result of the breach. However, limitations imposed by the law can restrict a claimant's right to choose on what basis to make a claim, thereby impacting the extent of the compensation awarded.

Features of Expectation and Reliance Loss:
💥 Expectation loss awards aim to place the claimant in the position they would have been in if the contract had been performed as agreed. The financial assessment of expectation loss can vary based on the circumstances of the case:
💥 Nominal damages may be awarded where there is an available market for the goods or services in question (Sale of Goods Act 1979, s. 51(3), Charter v Sullivan).
💥 Full loss recovery may be granted where there is no available market to assess damages (Thompson Ltd v Robinson Gunmakers Ltd).
💥 Cost of cure may be awarded if it is reasonable and feasible to rectify the breach (Ruxley Electronics and Construction Ltd v Forsyth).
💥 Loss of chance may also be considered in assessing expectation loss (Chaplin v Hicks).
💥 Reliance loss awards, on the other hand, aim to restore the claimant to the position they were in prior to entering into the contract. These damages compensate for wasted expenditure and other losses incurred due to the breach (Anglia Television v Reed).

Restrictions on Claimant's Choice:
In principle, claimants have the choice to base their claim on either expectation or reliance loss. However, certain limitations are imposed by the law to restrict claimant choice:
💥 Courts typically do not allow claims for both expectation and reliance loss as this would amount to double compensation for the same loss (Anglia Television v Reed; Cullinane v British Rema Manufacturing Co Ltd).
💥 The bad bargain rule limits compensation in cases where the claimant may have negotiated a contract poorly, capping damages at a nominal amount to prevent the claimant from benefitting more from the breach than they would have from performance (C & P Haulage v Middleton; Anglia Television v Reed).
💥 Proving that the bargain was disadvantageous lies with the defendant (CCC Films (London) Ltd v Impact Quadrant Films Ltd).
💥 The speculative damage rule requires claimants to base their claim on reliance loss principles in cases where losses are difficult to calculate (McRae v Commonwealth Disposals Commission; Sapwell v Bass). However, courts have shown a willingness to make educated estimates in awarding damages (Chaplin v Hicks; Simpson v LNER Co).

Conclusion:
The legal rules governing expectation loss and reliance loss in claims for damages play a crucial role in determining the compensation awarded to claimants in cases of breach of contract. While claimants generally have the right to choose the basis of their claim, limitations imposed by the law serve to ensure fairness and prevent unjust enrichment. Understanding these rules is essential for both claimants and defendants navigating contract disputes.