In the case of breach, how are damages typically calculated?

The correct approach to calculating damages in the event of a breach of contract, particularly in real property transactions, focuses on determining the difference between the contract price and the actual value of the property on the breach date. This method is grounded in the principle of expectation damages, which aims to put the non-breaching party in the position they would have been in had the contract been fulfilled.

When a breach occurs, the non-breaching party is entitled to recover an amount that reflects the economic benefit they were supposed to achieve through the contract. By assessing the difference between what was agreed upon in the contract and the property's value at the time the breach occurred, the damages effectively compensate for the loss incurred due to the breach.

Other methods of calculating damages, such as a full refund of the purchase price or focusing solely on out-of-pocket expenses, do not adequately address the loss of expected benefits under the contract. The current market value of the property does not necessarily reflect the specific loss suffered by the non-breaching party, especially if the breach occurred before the property's market value could be realized.

Using the difference between the contract price and the value at the time of breach thus ensures a fair measurement of damages that aligns with the parties' original agreements and intentions