Remedies — an interactive Contracts and Sales lesson covering expectation, reliance, restitution, incidental and consequential damages, Hadley foreseeability, mitigation, certainty, liquidated damages, specific performance, injunctions, UCC cover, resale, and the lost volume seller.
Use the tools below to calculate damages, classify remedies, test foreseeability, and review the limits on contract recovery.
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Welcome back to Law School. We have reached the most anticipated part of the course: the “Payday.” In Day 4, we saw how a contract breaks. Today, we answer the question every client asks: “What do I get out of this?”
In Torts, we looked to “make the plaintiff whole” by returning them to the position they were in before the accident. Contracts are different. Contract law is not about punishment; it’s about expectation. We want to put the non-breaching party in the position they would have been in if the contract had been performed perfectly.
Today, we will master the hierarchy of damages, the strict rules of foreseeability, and the rare instances where the court will actually force someone to do what they promised.
When a contract is breached, the court primarily looks to award money. There are three ways to calculate that check, depending on the goal of the award.
This is the default remedy. The goal is to give the plaintiff the “Benefit of the Bargain.”
Example: You agree to buy a rare lens for $1,000. It’s worth $1,500. The seller breaches. Your expectation damages are $500, the profit you would have “made” by getting a $1,500 item for $1,000.
If expectation damages are too speculative, such as where you can't prove how much profit a new business would have made, the court uses Reliance Damages. The goal is to put the plaintiff back where they were before the contract was signed.
Example: You spend $2,000 preparing your studio for a guest who then cancels. The court awards you $2,000 to cover your out-of-pocket losses.
Restitution is about the defendant, not the plaintiff. It forces the breaching party to give back any benefit they unfairly received.
Example: You pay a $500 deposit for a drone. The seller never ships it. The seller must give you back the $500 to prevent them from being “unjustly enriched” by your money.
The “check” often includes more than just the price of the goods.
These are the minor costs of dealing with the breach.
Example: The cost of storing the rejected goods, or the cost of phoning other suppliers to find a replacement.
These are special damages unique to this specific plaintiff, such as lost profits.
The Foreseeability Rule: You can only collect consequential damages if they were foreseeable to the defendant at the time the contract was made.
Case Study: Hadley v. Baxendale. A mill's crankshaft broke. They hired a carrier to deliver it for repair. The carrier was slow. The mill sued for the profits lost while the mill was closed. The Court said NO. The carrier didn't know the mill only had one crankshaft. Since the loss wasn't foreseeable, the carrier didn't have to pay for the lost profits.
Even if you have been wronged, the law places three hurdles in your way:
You must be able to prove your damages with reasonable certainty. You cannot guess. New businesses often struggle here because they have no “track record” of profits.
The non-breaching party has a legal duty to minimize their losses. You cannot sit around and let the bill grow.
Example: If you are fired in breach of a contract, you must try to find a comparable job. If you don't even try, the court will deduct what you could have earned from your award.
As mentioned, if the damage was a “weird” or “unique” consequence that the other guy didn't know about, you’re out of luck.
Sometimes, parties agree in the contract itself what the “fine” will be if someone breaches. This is common in construction.
The Rule of Enforceability: A liquidated damages clause is valid ONLY IF:
The Penalty Rule: If the amount is so high that it looks like a “punishment,” for example, “If you are one day late, you owe $1 Million,” the court will strike it down as an unenforceable penalty.
Sometimes, no amount of money can fix the problem. In these rare cases, the court uses “Equity.”
The court orders the defendant to actually do the thing they promised.
Real Estate: Every piece of land is considered “unique.” Specific performance is the default remedy for land.
Unique Goods: Art, antiques, or rare “one-of-a-kind” items.
Service Contracts: NEVER. You cannot get specific performance for services because forcing someone to work is considered “involuntary servitude,” slavery, and it's impossible for a court to supervise the quality of the work.
The court orders someone NOT to do something.
Example: A “Non-Compete” agreement. If a coder leaves The Net Group and tries to work for a rival, the court can issue an injunction to stop them.
The UCC has its own “short-cuts” for calculating damages:
If a seller breaches, the buyer buys replacement goods.
If a buyer breaches, the seller sells the goods to someone else.
If a store has an unlimited supply of a good, like TVs, and a buyer breaches, the store can sue for the lost profit on that sale, even if they sold the TV to someone else. Why? Because if the buyer hadn't breached, the store would have sold two TVs instead of one.
A YouTuber hires a professional editor to finish a “Black Friday” special. The contract price is $2,000. Two days before Black Friday, the editor quits. The YouTuber has to hire a last-minute emergency editor for $3,500. Because the video was 4 hours late, the YouTuber missed the peak traffic window and lost $10,000 in projected ad revenue.
Are you ready for the Day 5 Podcast Art, or should we talk about “The Lost Volume Seller” some more?
In software development, “Remedies” are like your Error Handling and Rollback procedures. If a function fails, meaning breach, does the system try to “Cover” by calling a backup API, meaning Expectation? Or does it just “Revert” to the last stable state, meaning Reliance or Restitution? Which “Error Protocol” do you think is most efficient for your legal scripts?
3000 x 3000 px square image. A high-end legal conference room. Two real people (lawyers) are intensely reviewing a document. In the center, a golden mechanical calculator from the 19th century is open, with coins and dollar bills spilling out of one side, balanced against a broken clock and a torn contract on the other side of a scale. The lighting is cinematic, highlighting the "Calculation of Justice." Text at bottom: "THE LAW SCHOOL OF AMERICA | CONTRACTS & SALES | DAY 5".
The Law School of America: Contracts & Sales
Day 5: The Price of the Broken Promise — Remedies
Welcome back to The Law School of America. We have reached the most anticipated part of the course: the “Payday.” In Day 4, we saw how a contract breaks. Today, we answer the question every client asks: “What do I get out of this?”
In Torts, we looked to “make the plaintiff whole” by returning them to the position they were in before the accident. Contracts are different. Contract law is not about punishment; it’s about expectation. We want to put the non-breaching party in the position they would have been in if the contract had been performed perfectly.
Today, we will master the hierarchy of damages, the strict rules of foreseeability, and the rare instances where the court will actually force someone to do what they promised.
This repeated section in the document duplicates the main Day 5 remedy lesson above. The full substance is preserved throughout the website, including the Big Three monetary damages, consequential and incidental damages, recovery barriers, liquidated damages, equitable remedies, UCC remedies, checklist, challenge, and Day 6 preview.
Next up: Day 6: The Outsiders — Third-Party Beneficiaries, Assignments, and Delegations.
Tap the card to flip between prompt and answer.
What is the default remedy for breach of contract?
Which doctrine limits recovery of special lost profits unless the defendant had reason to know of them at the time of contracting?
Save session notes while reviewing. Notes stay in this browser session.
For any remedies problem, move in order: identify the remedial goal; calculate expectation as the default; switch to reliance if expectation is too speculative; use restitution to strip unjust enrichment; add incidental damages when they are ordinary breach-handling costs; test consequential damages under Hadley foreseeability; reduce or deny damages for uncertainty or failure to mitigate; test liquidated damages for reasonableness rather than penalty; consider specific performance for land or unique goods; reject specific performance for services; then apply UCC cover, resale, or lost-volume principles when goods are involved.