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Contract Damages in Business Litigation in Texas
After businesses enter into a contract, those entities have certain responsibilities to one another until such a time that the contract has been completed. If one of the parties materially breaches the contract and the other party is harmed by that breach, then the other party is entitled to damages. But how do we measure those damages, i.e., how does the law provide an injured party damages in a contract case?
Plaintiffs in breach of contracts cases can seek several types of damages. These types of damages can be distinguished according to the function that each serves. In general, the types of available damages fall into three categories, known as “benefit of the bargain” (or “expectancy”), “reliance,” and “restitution” damages. It is sometimes said that expectancy damages are the “normal measure” of damages. What this means is that benefit-of-the-bargain damages is the most commonly sought measure or type of damages. It is does not imply that it is superior to the other measures of damages.
Benefit of the Bargain Damages: A party wishing to be placed in the same economic position that it would have occupied had the contract not been breached will seek expectancy damages as a result. Expectancy damages are tied to the expected benefit the non-breaching party was to receive had the breaching party not breached the contract.
