The expectancy interest
is a damage theory
in the law of contracts
. Simply put, expectancy is the amount of damages
that put a party
in a position that they would have been had a contract been fulfilled. The non-breaching
party is allowed to pursue damages that put them in the position they expected
to be in when the contract was signed.
Example: Seller contracts with buyer to buy 1000 bushels of apples at 8 dollars a bushel. Seller breaches by failing to deliver the apples. Buyer then buys 1000 bushels of apples (the buyer needs them, after all) but buyer has to pay 9 dollars a bushel (the market price has gone up!) So, buyer has had to pay 9000 dollars for the 1000 bushels instead of 8000 dollars as was contracted for with seller. Pursuing an expectancy interest, buyer can sue seller for 1000 dollars, which is the difference between the contract price and the substitute price. At the end of the day, the buyer has 1000 bushels of apples, and has a total outlay of 8000 dollars ( 9000 for the apples minus the 1000 recovered from the seller), which is the position buyer expected to be in when the contract was signed.