loss of bargain rule

Loss of bargain rule is a doctrine used in contract and fraud cases that measures damages based on the value the injured party would have received if the contract had been fully performed or if the representation had been true. Its purpose is to place the injured party in the same financial position they would have occupied had the contract or representation been fulfilled. Under this rule, damages are calculated as the difference between the actual value of what was received and the value it would have had if the agreement or representation were as promised.

For example, in a case involving fraudulent misrepresentation during the sale of a house, if the seller falsely represents that the property is worth $500,000 when it is actually worth $400,000, the loss of bargain damages would equal $100,000 (the difference between the represented and actual value). 

The loss of bargain rule is a specific measure of expectation damages, which generally seek to give the injured party the benefit of the bargain.

[Last reviewed in October of 2025 by the Wex Definitions Team] 

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