R2d § 347
Measure of Damages in General
Subject to the limitations stated in §§ 350-53, the injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, plus (b) any other loss, including incidental or consequential loss, caused by the breach, less (c) any cost or other loss that he has avoided by not having to perform.
Professor's notes
Elements (expectation damages formula): injured party has a right to damages based on his expectation interest as measured by (a) the loss in the value to him of the other party's performance caused by its failure or deficiency, PLUS (b) any other loss, including incidental or consequential loss, caused by the breach, LESS (c) any cost or other loss that he has avoided by not having to perform.
Loss in value + other loss − costs avoided.
Hawkins v. McGee operationalizes (a): value of the promised perfect hand minus value of the actually delivered hand.
Common misunderstanding: students forget the subtraction in (c). The plaintiff must net out costs avoided: labor not spent, materials not bought. Failing to subtract overcompensates. The Hawkins court also made the pain-and-suffering move (incidental loss under (b)): but only for the operation, not for what would have come from a successful operation either way.
Cases that operationalize this rule
Text
R2d § 347. Measure of Damages in General.
Subject to the limitations stated in §§ 350-53, the injured party has a right to damages based on his expectation interest as measured by
(a) the loss in the value to him of the other party’s performance caused by its failure or deficiency, plus
(b) any other loss, including incidental or consequential loss, caused by the breach, less
(c) any cost or other loss that he has avoided by not having to perform.