Professor Christopher Wonnell's excellent paper, Expectation, Reliance, and the Two Contractual Wrongs,' makes two basic points,
both of which I find convincing, but neither of which contract scholars generally appreciate and accept. The first point, largely descriptive and so less controversial, is that the concepts of expectation and reliance are not simply two different ways of conceiving compensation; rather, they are two different ways of conceiving contractual wrongs from both a moral and an economic perspective.2 From a moral perspective, expectation damages remedy the wrong of breaching a contractual promise that should have been performed. Reliance damages remedy the wrong of encouraging reliance through a contractual promise that either should not have been made or should no longer be performed. From an economic perspective, expectation damages focus on deterring wrongful breaches. Reliance damages focus on deterring wrongful contracting behavior other than breach. The second point, normative and highly controversial, is that courts should choose between expectation and reliance remedies depending on the reason for the breach.3 Several years ago, I tried to make similar points in an article that Wonnell generously includes in the pantheon he parades in the last section of his article,' so the fact that I mostly agree with him is not all that surprising.
George M. Cohen,
Finding Fault with Wonnell's "Two Contractual Wrongs",
San Diego L. Rev.
Available at: https://digital.sandiego.edu/sdlr/vol38/iss1/5