When are expectancy damages, including damages for lost profits, reasonably foreseeable and therefore recoverable?
In Stockton East Water District v. United States, 109 Fed.Cl. 760 (2013), a United States Court of Federal Claims engaged in a detailed discussion of the recoverability of “expectancy damages,” a category of damages that includes but is not limited to lost profits. The party seeking expectancy damages must show that the claimed damages were within the realm of reasonable foreseeability at the time the contract was entered into. Actual foresight is not required, and the specific loss need not have been within the contemplation of the parties at the time of contracting. Reasonable foreseeability requires merely that the injury suffered must be one of a kind that the defendant had reason to foresee and of an amount that is not beyond the bounds of reasonable prediction. The breaching party will not be liable for a particular type of loss that was so unusual as not to have been foreseeable.