Understanding Benefit-of-the Bargain Damages in Contract Law
Definition & Meaning
Benefit-of-the-bargain damages refer to the compensation that a party who suffers from a breach of contract is entitled to receive. These damages aim to cover the difference between what the injured party expected to gain from the contract and what they actually received. Essentially, it seeks to restore the aggrieved party to the position they would have been in had the contract been fully performed. This type of damage calculation is often associated with the actual value of the agreement versus the value that was represented at the time of the contract.
Legal Use & context
Benefit-of-the-bargain damages are primarily used in contract law, particularly in civil cases involving breaches of contract. This legal concept is crucial for individuals and businesses seeking to recover losses incurred due to another party's failure to fulfill their contractual obligations. Users can manage their claims more effectively by utilizing legal templates from US Legal Forms, which are drafted by experienced attorneys.
Real-world examples
Here are a couple of examples of abatement:
Example 1: A contractor agrees to build a custom home for a client for $300,000. If the contractor fails to complete the project, and the client incurs $50,000 in additional costs to hire another contractor, the client may claim benefit-of-the-bargain damages to recover those costs.
Example 2: A buyer purchases a car that was advertised as having a specific value. If it turns out the car is worth significantly less due to undisclosed issues, the buyer can seek benefit-of-the-bargain damages to recover the difference between the purchase price and the actual value of the car. (hypothetical example)