Expectation, Reliance, and Restitution Damages in Ontario: The Three Ways Courts Measure Your Loss

Someone breached a contract with you. You know you’re owed something — but "something" isn’t a legal answer. Ontario courts don’t award damages based on how wronged you feel; they apply one of a small number of recognized measures, each aimed at a different kind of loss. Understanding which one applies to your situation changes what you can realistically claim, and how you should be building your case.

Expectation Damages: The Default Measure

Expectation damages are the standard remedy for breach of contract in Ontario. The goal is to put the innocent party in the financial position they would have been in if the contract had been performed as promised — not better off, not worse off, just where the bargain should have left them.

In practice, this usually means:

• The profit you would have earned had the deal gone through
• The extra cost of getting a substitute performance elsewhere (a replacement contractor, supplier, or purchaser)
• The value of what you were promised, less what you actually received

Expectation damages require proof — courts need a reasonable basis to calculate the loss, not speculation. A claim for lost profits that can’t be supported by evidence (past performance, contracts, market data) is vulnerable to being reduced or rejected.

Reliance Damages: When Expectation Loss Is Too Speculative

Sometimes the expected benefit of a contract is too uncertain to prove — a new business venture with no track record, for example. In those cases, a court may instead award reliance damages: reimbursement for the actual, out-of-pocket costs the innocent party incurred in reliance on the contract being performed.

Reliance damages look backward, not forward. Instead of asking "what would you have gained," the question becomes "what did the broken promise actually cost you to rely on it" — money spent on preparation, deposits paid, opportunities foregone in favour of this deal. This measure is typically used as an alternative where expectation damages can’t be reliably calculated, not as an automatic option in every case.

Restitution Damages: Reversing an Unjust Benefit

Restitution damages work differently again. Rather than compensating the innocent party for a loss, restitution focuses on the benefit the breaching party received and requires them to give it back, to prevent unjust enrichment. This measure often comes up when:

• A contract is void, unenforceable, or has been terminated for breach, and one party has already conferred a benefit (paid a deposit, delivered goods, performed services) that the other side hasn’t paid for
• The breaching party’s gain, rather than the innocent party’s loss, is the more appropriate — or larger — figure to focus on

Comparing the Three Measures

A claim can sometimes plead more than one of these measures in the alternative, leaving the court to decide which fits the evidence — but a plaintiff generally can’t recover under more than one measure for the same loss (no double recovery).

Two Principles That Limit Every Damages Award

Regardless of which measure applies, two doctrines routinely narrow what’s actually recoverable:

• Mitigation. A party claiming damages generally has a duty to take reasonable steps to reduce their own loss — for example, seeking a replacement contract on reasonable terms rather than simply letting the loss accumulate. Failing to mitigate can reduce the final award.
• Remoteness. Damages are generally limited to losses that were reasonably foreseeable at the time the contract was made — not every downstream consequence of a breach, however real, is automatically recoverable.

Courts can also award interest on a damages award under a statutory formula that’s set periodically — the applicable rate changes, so ask your lawyer for the current figure rather than relying on an old number.

Frequently asked questions