Which statement best describes expectancy damages in contract law?

• A. Reliance damages reimburse costs incurred in reliance on the contract.
• B. Punitive damages are awarded to punish wrongdoing.
• C. Nominal damages are used when there is no actual loss.
• D. Expectancy damages aim to put the injured party in the position as if the contract had been performed.

Answer: (C)

Expectancy damages are about making the injured party whole by putting them in the position they would have been in if the contract had been performed. This measure captures the value of the promised performance and any resulting profits or benefits the party expected to receive, minus what actually occurred and any costs saved due to the breach. So, if a breach deprives someone of the bargain they expected, expectancy damages aim to cover that difference as if the contract had been carried out.

By contrast, reliance damages recover costs already incurred in preparation or performance under the contract, not the value of the promised outcome. Nominal damages are a token award when no actual loss exists. Punitive damages are not typical in contract cases and are reserved for wrongdoing like fraud or intentional harm, not for breaches of contract meant to compensate.