CBV Institute is pleased to release our most recent insights paper titled, Expectation Damages vs Reliance Damages – A Financial Expert’s Perspective, written by Ivy Tse, CBV, and Eric Mah, CBV.
Selecting an appropriate financial damages approach to use in calculating the losses suffered by a party in a breach of contract dispute is not always a clear-cut exercise. Undoubtedly, counsel and their client on both sides of a dispute have arguments for their view on the quantum of damages suffered. However, the onus is on financial experts to provide an independent and objective view on the quantum of damages. Financial experts in this position often find themselves asking: “What is the actual financial loss as a result of the alleged wrongdoing?” and “Can that loss be reliably calculated and reasonably supported?”
This paper examines the topics of expectation damages and reliance damages, beginning with an overview of the two types of damages. It then proceeds to review some relevant judicial decisions which provides some guidance in the selection of an appropriate damages approach. Lastly, the paper provides a list of potential considerations, from the perspective of financial experts, in calculating expectation and reliance damages.