Threefold Interests in Contract Damages

In civil law systems, damages for breach of contract are divided into loss suffered and loss of profits. But in Common law systems, a party to the contract is regarded to have three interests: expectation, reliance and restitution. Breach of contract deprives the aggrieved party from one or more of these interests and entitles him to claim the related damages. Contract damages in proper sense include expectation damages. It has a relatively long background in Common law systems and is regarded as the most important basis for determining contract damages. In the face of expectation interest, some Common law experts attempted to support reliance interest. Although their theory could not satisfy the courts, in practice it has deeply affected Common law literature on the criterion for assessing contract damages.
Following civil law approach, Iranian legal literature as well as some Iranian Acts adopted the twofold division of damages, but study of Common law approach could help in the understanding of the aims and types of contract damages too.
This article tries to introduce these three interests and damages and study the position of Imamyyah fiqh and Iranian law in this regard