Expectation Damages and Reliance Damages

What do we do when our relationship expectations aren’t met? What happens when someone breaks a rule, violates an agreement, or otherwise doesn’t do what we legitimately expected them to do, and it harms us?

Expectation Damages vs. Reliance Damages

In the law, there are different kinds of damages that can be awarded based on the type of injury. When one party breaks a contract, typically the other party is awarded expectation damages. Expectation damages are meant to put the other party in the position they would have been in had the contract been fulfilled.

Imagine that I agreed to sell you my couch for $200. You rent a truck for $50 to transport it, but when you show up, I say I changed my mind and don’t want to sell. The cheapest comparable couch you can find costs $300 and will require another $50 truck rental to pick it up. Your expectation damages are $100. You expected to pay $200 and a $50 rental fee, and receive a couch. Instead, you paid $300 and a $50 rental fee to receive a couch, so you are $100 worse off than you would have been had I stuck to the deal.

Another type of damages that are typically awarded when expectation damages are difficult to estimate or when circumstances are more appropriate are reliance damages. Reliance damages are intended to put the injured party in the position they would have been in had the contract never been made in the first place.

In the couch example, your reliance damages are $50. If we had never made the contract, you never would have spent the $50 on the truck rental. You paid that $50 in reasonable reliance on my promise to sell you my couch. Because I broke my promise, you’re out $50. If I break the deal before you rent the truck, you don’t have any damages, since you’re in the same position you would otherwise be in.

In a business context, there are good reasons why we typically award expectation damages for breach of contract. Unless there is an opportunity for an efficient breach, we want to encourage people to stick to their deals. Business runs on deals, and rules that encourage people to break deals would increase uncertainty. Uncertainty is bad for business, so we favor rules that increase stability and predictability.

Relationship Damages

In a relationship context, most of the time, we won’t be talking about money, but I think it’s useful to consider the general magnitude of a person’s responsibility when trying to make amends. There’s a big difference between trying to make up for wasting an hour of your life vs. ruining your career, and the amends required are different.

I find reliance damages to be the more appropriate way to think about relationship injuries. When a person breaks a promise I think it’s extraordinarily helpful to consider the conceptual difference between (a) putting someone in the position they would be had the promise never been made (reliance damages) vs. (b) putting someone in the position they would be had the promise been fulfilled (expectation damages). I favor thinking in terms of reliance damages because it’s more autonomy-promoting. It encourages people to make amends for any damage they’ve caused, but it also encourages people to renegotiate their agreements if they’re no longer benefiting from them. The thinking behind expectation damages is that people should stick to their agreements and that people have a responsibility to make sure the other party gets the benefit of the bargain no matter what. The thinking behind reliance damages is that sometimes shit happens, and people’s responsibility is to make up for any damage they’ve caused.

Examples

Let’s consider a few examples of common broken promises in relationships:

(1) you flake on a date.
(2) you fail to do the dishes as promised.
(3) you cheat sexually.
(4) you divorce your partner (after vowing “till death do us part”).

In example (1), expectation damages would seek to put the person in the position they would have been had you showed up. So from that thinking, your moral responsibility would be to take your partner out on a date, whether you want to or not, because that’s what you promised. I’m not a fan of this solution, because I don’t think people should ever feel required to give social attention when they don’t want to. It’s a pillar of consent culture that nobody ever owes another person their social energy or attention, and our ethics ought to reflect that.

Reliance damages would seek to put the other person in the position they would have been in had you never promised to go on the date. If you back out soon enough, there really aren’t any damages, since the other person has time to make alternative plans. If not, you’ve ruined their evening, so it’s on you to make amends for that. It could mean taking them out on a different evening if that’s what you want to do, but it could also mean letting them borrow your Playstation so they’re not bored all evening. Or it could mean buying them a book or (if you live together) giving them control of the living room TV for the night. Thinking in terms of reliance damages give you options that don’t infringe on your autonomy.

Example (2) is interesting because expectation damages aren’t actually very problematic. You would just need to do the dishes that have been sitting in the sink all night. Most of the time, that’s a fine solution. It’s also interesting because there likely aren’t any reliance damages. If you didn’t promise to do the dishes, would the other person not have eaten? Would they have used paper plates? Probably not. It’s likely that the dishes would have been made no matter what, so really, the person is in the same position as if no promise was made.

So does that mean it’s ok to promise to do the dishes, then back out at the last minute? Of course not. What this indicates to me is that the issue with you not doing dishes isn’t that you said you would do them. The issue is that if you never do the dishes, you’re a jerk! If you did the dishes for the past three evenings, then I don’t think there’s a big problem with you saying that you’re not going to do them tonight. You shouldn’t have said you’d do them, but I don’t think you owe the other person anything if they’re just taking advantage of your helpful nature to get you to do the dishes every night. However, if you don’t do a fair share of the housework, that’s problem whether you’ve agreed to or not. So in this situation, I still think it’s appropriate to think in terms of reliance damages. This is just a good reminder that there are other considerations aside from just broken promises.

In example (3), expectation damages would seek to put the person in the position they would have been had you not cheated. This is what most people do in this situation. It involves things like getting tested for STI’s, breaking off the other relationship, assuring your partner that it won’t happen again, and completing some kind of probationary period where your actions get some extra scrutiny. While this can be a good solution if maintaining your current relationship is your only consideration, I don’t favor it as an ethical requirement. What if you’re in love with the other person? What if you don’t want to be monogamous anymore? What if your partner is controlling and this is the excuse they need to micromanage your life?

Reliance damages put the person in the position as if you never promised monogamy in the first place. This might mean breaking up, if your partner desires only monogamous relationships. It might mean that you decide to open your relationship (although this is a notoriously bad way to start an open relationship). It might mean doing all of the same things as expectation damages and making a new promise of monogamy, if that’s what you want and your partner trusts you to keep to your word (which they probably shouldn’t).

Example (4) truly shows the absurdity of expectation damages. Expectation damages, in this situation, would mean getting remarried. Unless you’re a fanatical believer in the sanctity of marriage, I think we can agree that there is no ethical requirement to get remarried once you get divorced.

Reliance damages mean putting the other person in the position they would have been had you never promised to stay with them forever. In a divorce, a lot of this can be financial. Did the rely on your financial support and stop pursuing a career? Pay spousal support. Did they rely on your financial assistance when deciding to have a child? Pay child support. Did they take out a mortgage with you? Either figure out a compromise or sell the house and pay off the mortgage. Non-financially, there was probably a lot of emotional damage done, so make up for that as best you can.

Conclusion

When you’ve broken a promise, you’ve probably done something wrong. But what is it? Most analysis tends to view the act of breaking the promise as the bad thing, but I tend to disagree. I think it promotes freedom and autonomy much more to see the bad thing as making the promise in the first place. If you find yourself so motivated to break a promise that you overcome the psychological difficulty in doing so, I think most of the time it’s fair to say that you inaccurately predicted your feelings. Had you known that you would not want to stick to the agreements, you probably wouldn’t have made it. So I think it’s best to see the promise as the mistake.

Adopting the thinking behind reliance damages helps all parties focus on the promise as the mistake, and seeks to rectify the situation by putting the injured party in the position they would have been had the promise never been made. I want people to do whatever they want, as much of the time as possible. That can’t happen if our ethical thinking encourages people to stick to agreements even when they are no longer benefiting from them. I’d much rather adopt ethical rules which encourage the breaking of agreements that shouldn’t have been made in the first place and merely obligate people to make amends for the harm they caused.

Breaking promises is bad. Traditional morality says to keep your promises no matter what. My advice is different. I say, don’t make promises that you won’t want to keep. If you do, then making the promise was your mistake, and you are responsible for any injuries cause by another person’s reasonable reliance on your promise.

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