Also known as wasted expenditure. It is one of the losses that may be recovered for breach of contract. It refers to the expenses incurred by the claimant in reliance of the contract being performed. The aim of damages for reliance loss is to put the claimant in the position they would have been in had the contract never been made.

Although Expectation loss is the normal measure for assessing damages for breach of contract a claimant may claim reliance loss where it is not possible to calculate what their profits would have been if the contract had been performed, or if they made a bad bargain and expectation based damages would not lead to a substantial recovery.

It has been held that expectation loss and reliance loss are mutually exclusive to prevent double recovery. However, Chitty on Contracts (Sweet & Maxwell, 34th edition, Chapter 29, paragraph 29-032) states that this is correct if it is interpreted to mean that the claimant should not recover their gross profits expected under the contract and also the wasted expenditure incurred in reliance of the contract which they intended to meet from the gross profit. A claimant should, in principle, be able to recover for both profit and reliance loss as long as both claims do not overlap.

For further guidance, see Practice note, Damages for breach of contract: an overview.