Question

Your client has spent $400,000 in preparing to perform a big new contract. The other party to the contract, has just sent a fax saying, "in no circumstances will we perform." you would be most likely to sue for reliance damages if your client 1. Had a great bargain under the contract. 2. It is not clear whether your client would have made a profit under the contract. 3. The defendant is especially well financed and has a lot of money for litigation. 4. Your client is especially well financed and has a lot of money for litigation.

Answer 1

If it is not clear whether your client would have made a profit, then you will not be able to prove a positive expectancy with reasonable certainty, so you would prefer to recover all $400,000 in reliance costs. A is not true because if you could prove that it was a great bargain for your client, you would prefer to recover expectancy, including both the $400,000 and the big profits. It is hard to tell what the effect of C would be, and while perhaps not irrelevant, it is not as good an answer as B. If your client were well financed, it might be more tempting to try even for unclear expectancy, hiring fancy experts, so D is not the best answer.