Legal Memorandum: Damages for a Breach of Contract in WI

Issue: Under Wisconsin law, what damages are recoverable under a breach of contract claim?

The award of damages for a breach of contract should compensate an injured party for losses that necessarily flow from the breach.  Thorp Sales Corp. v. Gyuro Grading Co., 111 Wis. 2d 431, 438, 331 N.W.2d 342 (1983).  Wisconsin applies the “benefit of the bargain” measure of damages to a breach of contract claim.  See Eklund v. Koenig & Assoc., Inc., 153 Wis. 2d 374, 379, 451 N.W.2d 150 (Ct. App. 1989).  This means that “an injured party is entitled to the benefit of his agreement, which is the net gain he would have realized from the contract but for the failure of the other party to perform.”  Thorp, 111 Wis. 2d at 438-39.

This “benefit of the bargain” measure of damages is designed “to give the injured party the benefit of the bargain by putting it in as good a position as it would have been in had the contract been performed.”  Id. at 439.  If, however, the plaintiff would have incurred expenses and the breach saves those expenses, then the plaintiff is entitled only to the lost gross income less the expenses saved.  Id.  Therefore, when a party is prevented from fully performing a contract, she is entitled to recover the profits she would have realized by performing, that is, the difference between what she would have received and what it would have cost her to perform.  Id. at 440.

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