Legal Definitions - loss of bargain

Loss of Bargain refers to the financial harm or lost profit that someone experiences when a promised business deal or transaction does not happen because another party failed to uphold their end of an agreement, acted negligently, or intentionally interfered. It represents the value of what the wronged party expected to gain from the completed deal, which they now cannot realize. The purpose of awarding damages for loss of bargain is to put the injured party in the financial position they would have been in had the deal gone through as planned.

• Example 1: Real Estate Development

  A property developer enters into a contract to purchase a specific plot of land for $500,000, intending to construct a small apartment complex and sell the units for an estimated profit of $1.5 million. Before the sale is finalized, the landowner receives a higher offer and illegally sells the land to a different buyer, breaching the original contract with the developer.

  In this scenario, the developer suffers a loss of bargain. They not only lost the opportunity to acquire the land at the agreed price but, more significantly, lost the anticipated $1.5 million profit from the planned apartment complex. The damages sought would aim to compensate the developer for this lost profit, representing the value of the deal they expected to complete.

• Example 2: Specialized Equipment Manufacturing

  A custom bicycle manufacturer secures a contract to produce 100 high-performance racing bikes for a professional cycling team, expecting to earn a profit of $100,000. The manufacturer then contracts with a specialized carbon fiber supplier for the necessary frames. However, due to the supplier's severe negligence in their production process, the frames are delivered late and are all defective, making it impossible for the bicycle manufacturer to fulfill their contract with the cycling team.

  Here, the bicycle manufacturer experiences a loss of bargain. They lost the $100,000 profit they would have earned from the contract with the cycling team because the carbon fiber supplier's negligence prevented them from completing the bikes. The damages would cover this lost profit, putting the manufacturer in the financial position they would have been in had the supplier performed as agreed.

• Example 3: Exclusive Distribution Agreement

  A small, independent bookstore signs an exclusive agreement with a popular author to be the sole retailer for signed copies of her new book for the first month after its release, anticipating significant sales and increased foot traffic. A larger, national bookstore chain, aware of this exclusive deal, intentionally interferes by offering the author a much larger upfront payment to break her agreement and sign an exclusive deal with them instead.

  The independent bookstore suffers a loss of bargain. They lost the exclusive sales opportunity, the substantial revenue from selling the signed books, and the valuable publicity and customer traffic that would have resulted from being the sole initial distributor. This loss was directly caused by the national chain's intentional interference, leading to the author's breach of the original agreement.