As in most things in the law, it depends. It usually depends on what damages you are seeking. Here are the general rules: Civil Code section 3300 provides: For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximate caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.The detriment that is likely to result therefrom? Is that which is foreseeable to the breaching party at the time the contract is entered into. (Wallis v. Farmers Group, Inc. (1990) 220 Cal.App.3d 718, 737 [269 Cal.Rptr. 299], internal citation omitted.) Restatement Second of Contracts, section 351, provides: (1) Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made. (2) Loss may be foreseeable as a probable result of a breach because it follows from the breach (a) in the ordinary course of events, or (b) as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know. (3) A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.
Answered on May 10th, 2013 at 11:51 AM