California Breach of Contract Damages Calculator

Expectation damages aim to put you in the position you would have been in had the contract been fully performed. They give you the benefit of the bargain, including expected profits. Reliance damages aim to put you back in the position you were in before the contract was made, covering your out-of-pocket expenses incurred in reliance on the contract.

Expectation damages typically yield a higher recovery when the contract would have been profitable. Reliance damages may be preferable when: (1) expected profits are speculative or difficult to prove, (2) the contract would have been a losing deal, or (3) you want to avoid the burden of proving lost profits with reasonable certainty. Under California law, you can elect the most favorable theory but cannot double-recover under multiple theories.

Planning tip: Calculate both theories using this tool and choose the one that provides the best recovery for your specific situation.

Consequential damages (also called special damages) are indirect losses that result from the breach but are not a direct or immediate consequence of it. Common examples include lost profits from third-party contracts, lost business opportunities, damage to business reputation, and additional expenses caused by the delay.

Under the landmark rule from Hadley v. Baxendale (1854), adopted in California through Civil Code sections 3300 and 3301, you can recover consequential damages only if they were reasonably foreseeable by both parties at the time the contract was formed. This means the breaching party must have known or should have known about the potential for these specific losses when entering the agreement.

Key requirements: (1) The damages must have been foreseeable at contract formation, not just at the time of breach; (2) you must prove the amount with reasonable certainty; and (3) you must have taken reasonable steps to mitigate. Many contracts include limitation of liability clauses that cap or exclude consequential damages, so always review your contract terms.

In California, prejudgment interest on breach of contract claims is governed by Civil Code sections 3287 and 3289. The rules depend on whether your contract specifies an interest rate:

Contract specifies a rate (CC §3289(a)): The contractual rate continues to apply after the breach until a judgment or new obligation supersedes the contract.

No rate specified (CC §3289(b)): For contracts entered into after January 1, 1986, the statutory rate of 10% per annum applies. This is one of the highest prejudgment interest rates in the United States.

When interest begins to accrue: Under CC §3287(a), interest accrues from the date the amount became due, provided the damages are "certain, or capable of being made certain by calculation." For liquidated damages (a fixed sum owed under the contract), interest runs from the due date. For unliquidated damages, interest may not begin until the amount is made certain.

Daily calculation: The daily accrual rate is the annual interest divided by 365. For example, on $100,000 in damages at 10%: $100,000 x 0.10 / 365 = $27.40 per day.

California has different statutes of limitations depending on the type of contract:

• Written contracts: 4 years from the date of breach (Code of Civil Procedure §337)
• Oral contracts: 2 years from the date of breach (CCP §339)
• Fraud-based claims: 3 years from the date of discovery (CCP §338(d))

The limitations period generally begins on the date of the breach, not the date you discover the breach (except for fraud). Once the statute of limitations expires, you lose the right to file a lawsuit, and the defendant can raise the statute of limitations as an affirmative defense to have your case dismissed.

Tolling exceptions: Certain circumstances can pause ("toll") the limitations period, including: the defendant's absence from California, the plaintiff's minority or incapacity, imprisonment, and fraudulent concealment of the breach. Acknowledgment of the debt or partial payment may also restart the clock.

Important: Even if the statute of limitations has not expired, delays in filing weaken your case. Evidence is lost, memories fade, and witnesses become unavailable. File promptly.

Generally, no. Punitive damages are not available for ordinary breach of contract claims in California. Civil Code §3294 authorizes punitive damages only for tort claims involving oppression, fraud, or malice. Contract damages are designed to make the injured party whole, not to punish the breaching party.

However, there are important exceptions where punitive damages may be available alongside a breach of contract claim:

• Fraud in the inducement: If the defendant fraudulently induced you to enter the contract with no intention of performing
• Insurance bad faith: Unreasonable denial of an insurance claim can support both breach of contract and tort claims
• Tortious breach of the covenant of good faith: In limited circumstances (primarily insurance contracts)
• Intentional interference: A third party who intentionally interferes with your contract may be liable for punitive damages under a tort theory

Strategic note: If the facts support it, consider pleading both contract and tort causes of action. The tort claims may open the door to punitive damages that would not be available on the contract claim alone.