California Civil Jury Instructions (CACI) (2017)

361. Plaintiff May Not Recover Duplicate Contract and Tort Damages

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361.Reliance Damages
If you decide that [name of defendant] breached the contract, [name of
plaintiff] may recover the reasonable amount of money that [he/she/it]
spent in preparing for contract performance. These amounts are called
“reliance damages.” [Name of plaintiff] must prove the amount that [he/
she/it] was induced to spend in reliance on the contract.
If [name of plaintiff] proves reliance damages, [name of defendant] may
avoid paying [some/ [or] all] of those damages by proving [include one
or both of the following]:
[1. That [some/ [or] all] of the money that [name of plaintiff] spent in
reliance was unnecessary;]
[1. [or]
[2. That [name of plaintiff] would have suffered a loss even if [name
of defendant] had fully performed [his/her/its] obligations under
the contract].
New December 2015
Sources and Authority
• “One proper ‘measure of damages for breach of contract is the amount
expended [by the nonbreaching party] on the faith of the contract.’ ” (Agam v.
Gavra (2015) 236 Cal.App.4th 91, 105 [186 Cal.Rptr.3d 295].)
• “Where, without fault on his part, one party to a contract who is willing to
perform it is prevented from doing so by the other party, the primary measure
of damages is the amount of his loss, which may consist of his reasonable
outlay or expenditure toward performance, and the anticipated profits which he
would have derived from performance.” (Buxbom v. Smith (1944) 23 Cal.2d
535, 541 [145 P.2d 305].)
• “This measure of damages often is referred to as ‘reliance damages.’ It has been
held to apply where, as here, ‘one party to an established business association
fails and refuses to carry out the terms of the agreement, and thereby deprives
the other party of the opportunity to make good in the business . . . .’ ” (Agam,
supra, 236 Cal.App.4th at p. 105, internal citations omitted.)
• “[I]n the context of reliance damages, the plaintiff bears the burden to establish
the amount he or she expended in reliance on the contract. The burden then
shifts to the defendant to show (1) the amount of plaintiff’s expenses that were
unnecessary and/or (2) how much the plaintiff would have lost had the
defendant fully performed (i.e., absent the breach). The plaintiff’s recovery must
be reduced by those amounts.” (Agam, supra, 236 Cal.App.4th at p. 107,
internal citation omitted.)
• “Concerning reliance damages, Restatement [Second of Contracts] section 349
provides as follows: ‘As an alternative to the measure of damages stated in
[Restatement section] 347, the injured party has a right to damages based on his
reliance interest, including expenditures made in preparation for performance or
in performance, less any loss that the party in breach can prove with
reasonable certainty the injured party would have suffered had the contract
been performed.’ ” (US Ecology, Inc. v. State of California (2005) 129
Cal.App.4th 887, 907 [28 Cal.Rptr.3d 894], original italics.)
Secondary Sources
1 Witkin, Summary of California Law (10th ed. 2010) Contracts, § 869 et seq.
15 California Forms of Pleading and Practice, Ch. 177, Damages, § 177.79
(Matthew Bender)
6 California Points and Authorities, Ch. 65, Damages: Contract, § 65.21 et seq.
(Matthew Bender)
Matthew Bender Practice Guide: California Contract Litigation, Ch. 7, Seeking or
Opposing Damages in Contract Actions, 7.15
362–369. Reserved for Future Use