A. Introduction

Author:John D. McCamus
Profession:Professor of Law. Osgoode Hall Law School, York University

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The principal remedy available to a victim of a breach of contract is an award of compensatory damages. Damage awards may be contrasted with court orders that require the party in breach of contract either to perform the contract or to refrain from conduct that amounts to a breach of contract. Such orders, sometimes referred to as "coercive" remedies were granted in exceptional circumstances by courts of equity and will be the subject of treatment in a subsequent chapter.1Compensatory damages are, however, the usual remedy for breach of contract. The governing principle for calculating compensatory damages in a claim for damages for breach of contract is the expectancy principle that requires the party in breach to pay, as damages, an amount of money that will provide the victim of the breach with the financial equivalent of performance. In this chapter, we examine the expectancy principle and its operation. Further, an account is offered of the principles that limit or reduce the scope of compensatory damage awards such as the principle that the plaintiff cannot recover for losses that could have been avoided by reasonable steps taken in mitigation by the plaintiff. In the typical case, the subject of compensation is economic loss suffered by the plaintiff. It must be considered, however whether compensation

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may also be awarded for certain intangible losses such as the mental stress and anxiety that the plaintiff may suffer as a result of breach. As we will see, limited recognition has been given by the common law to compensate for injuries of this kind.

Although the expectancy principle is the governing principle, other forms of monetary relief can be imagined. Thus, compensation could be calculated on the basis of a principle that would restore the plaintiff to the position he or she was in prior to entering the contract. On this basis, the plaintiff would be awarded recovery of out-of-pocket expenses incurred in reliance on the contract and other similar losses. This measure of relief, referred to in contract law as the reliance measure, is similar to the general principle for calculating damages in a tort claim. Occasionally, damages calculated on a reliance measure can be awarded in a claim for damages for breach of contract on the basis of the analysis considered further in this chapter. A further alternative measure of relief would be to simply require the party in breach to restore to the plaintiff benefits...

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