Expectation Interest Law and Legal Definition

Expectation interest is defined as a party’s interest in having the benefit of his/her bargain by being put in as good a position as s/he would have been in had the contract been performed. A party's expectation interest represents the actual worth of the contract to him /her and therefore recovery is limited to the loss s/he has actually suffered by reason of the breach. In Anchor v. Linton, 2000 U.S. App. LEXIS 24077 (6th Cir. Ohio Sept. 25, 2000), it was held that, a party seeking damages based on an expectation interest is only entitled to a damage award which places him/her in as good a position as s/he would have been had the contract been fully performed.

A party's expectation interest is measured by his/her anticipated receipts and losses caused by the breach less any cost or other loss s/he has avoided by not having to perform. In other words, expectation interest is not anticipated by gross receipts but anticipated net profits which constitute the proper measure of damages.