Contracts II

Restatement Second of Contracts § 351


Unforeseeability and Related Limitations on Damages

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  1. Damages are not recoverable for loss that the party in breach did not have reason to foresee as a probable result of the breach when the contract was made.
  2. Loss may be foreseeable as a probable result of a breach because it follows from the breach
    1. in the ordinary course of events, or
    2. as a result of special circumstances, beyond the ordinary course of events, that the party in breach had reason to know.
  3. A court may limit damages for foreseeable loss by excluding recovery for loss of profits, by allowing recovery only for loss incurred in reliance, or otherwise if it concludes that in the circumstances justice so requires in order to avoid disproportionate compensation.