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Reliance Loss

As a general rule, reliance losses are calculated when a breach of contract occurs, rather than when a contract was entered into. The term “reliance loss” in effect signifies the compensation that occurs when one of the parties suffers a financial loss because of breach of contract by the other party. Damages are awarded according to the expenses that occurred because of the breach of contract, and are designed in a way that ensures the innocent party will be put in the same financial position he would have been in, had he not entered the contract.

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