Reliance damages may be recovered for expenses incurred in reasonable reliance on the contract. Such damages may be reduced by the amount spent on materials that could reasonably be repurposed. This principle best illustrates:

• A. A The duty to mitigate damages
• B. B The measure of consequential damages
• C. C The limitation on reliance damages
• D. D The nomiality of incidental damages

Answer: (C)

Reliance damages are meant to put you in the position you would have been in if the contract had never been formed, by reimbursing the expenses you incurred in reliance on the contract. But there’s a limit: you subtract amounts tied to materials that could reasonably be repurposed. If some costs you incurred in reliance can be offset by the salvage value of materials you can reuse, those offsets reduce the recovery. This shows the limitation on reliance damages—the remedy is capped by what was actually spent for reliance and reduced by salvageable value, not an unlimited repayment.

This differs from the duty to mitigate, which is about taking reasonable steps to limit damages; from consequential damages, which cover indirect losses like lost profits; and from nominal or incidental damages, which are typically small or incidental in nature.