MBE Rules · Contracts
Reliance damages
The rule
Awarded when expectation damages are too speculative. Puts the non-breaching party in the position they would have occupied had the contract NEVER been made — recovering out-of-pocket expenses incurred in reliance.
In plain English
Reliance damages pay back the money you spent because you trusted the contract would happen, but it didn't.
Worked example
A buyer spends $500 on supplies for a canceled event. The buyer can claim $500 in reliance damages to cover those costs.
Memory hook
Reliance = Rewind Reality. When expectation's fuzzy, recover spent cash to reset to pre-contract world.
The trap
Students think: Reliance damages always equal expectation damages. Wrong, because reliance aims to undo expenses. The actual test is to restore pre-contract position.
How examiners test it
The MBE loves: a contract with uncertain profits + incurred costs. Trap: students assume profit recovery. Focus on reimbursing expenses, not lost profits.
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