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Simple English definitions for legal terms
loss of bargain rule
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A quick definition of loss of bargain rule:
The loss of bargain rule is a legal principle that says if someone breaks a contract or lies about something in a contract, the person who was hurt should get enough money to make up for what they lost. This means they should be in the same position they would have been in if the contract had been followed or if the lie had been true. For example, if someone sold a house and lied about its condition, the person who bought the house could get money to make up for the difference between what the house is worth now and what it would have been worth if it had been in the condition the seller said it was in. This is called the loss of bargain rule.
A more thorough explanation:
The loss of bargain rule is a legal principle that applies in cases of breach of contract or contract fraud. It states that the damages awarded to the injured party should be enough to put them in the same position they would have been in if the contract had been fulfilled as promised or if the fraudulent representation had been true.
For example, if a person buys a house based on the fraudulent representation that it has a new roof, but later discovers that the roof is old and needs to be replaced, the loss of bargain rule would require the seller to compensate the buyer for the difference in value between the house with a new roof and the house with an old roof.
The loss of bargain rule is designed to ensure that parties to a contract are held accountable for their promises and that the injured party is not left worse off as a result of the breach or fraud.