What is avoided in the calculation of expectation damages?

In the calculation of expectation damages, the focus is on compensating a party for the loss of what they reasonably expected from a contract's performance. Expectation damages aim to place the injured party in the position they would have been in had the contract been fulfilled.

Costs avoided by not having to perform are excluded from these calculations because they do not represent a loss that the injured party incurred due to the breach. Instead, these costs can be seen as a benefit that the injured party gains from the breach since they no longer have to incur those expenses. Thus, when determining expectation damages, it is essential to avoid accounting for costs that the party does not have to pay due to not completing the contract, as including them would unfairly inflate the damages awarded.

In contrast, future potential earnings can be relevant to expectation damages, as they are related to the expected profits from a successful performance. Market appreciation can also be significant because it may reflect the increased value of the property that would have been realized if the contract had been performed. Reimbursements for legal fees are generally separate from expectation damages, typically not included in this calculation unless specified in the contract due to their nature as transaction costs rather than direct losses from the breach itself.