Liquidated damages B. Damages 1. The key here is that perfect damages will leave the promisee indifferent between performance and nonperformance of the contract. However, in deciding on how to measure the promisee's benefit from performance, we have to choose a base line. Damages then are equal to difference between no contract and net value of performance of the contract. Damages then are equal to difference between no contract and net value of performance of the next best contract.
Damages then are equal to the promisee's net reliance costs.
This remedy simply requires the promisor to perform the contract. Note that an advantage it has over damages is that the court does not have to estimate the value of performance to the promisee. Availability of substitutes and probability of error by the courts when estimating damages are important considerations when deciding between damages and specific performance. The contract contains explicit terms specifying the remedy in the event of breach. Courts are not overly fond of liquidated damages clauses and generally do not enforce punitive sanctions.