The purpose of damages is not to punish the party in breach but to compensate the innocent party for the non-performance of the contract and the amount of damages is thus assessed by seeking to put the plaintiff in the position that would have pertained had the contract been performed. The general rule is thus that the measure of damages protects the plaintiff's expectation loss. This represents the loss of bargain or profit that the plaintiff has suffered.
Damages are available as a remedy as of right to the party who has suffered the breach of contract.
Obviously the party claiming will have to show that the breach caused the loss suffered but even if this can be achieved the full expectation loss will only be recoverable if the plaintiff does not fall foul of the two rules set out below. Not all losses flowing from a breach of contract will be recoverable as damages due to the rule in Hadley v Baxendale which states that the defendant will only be liable for losses which occur as a natural result of the breach or which were in the reasonable contemplation of both of the parties at the time the contract was formed . A plaintiff who could therefore easily remedy the breach by purchasing or selling to another party in the market will be expected to do so and whether the plaintiff does in fact mitigate his damage or not he will only be entitled to receive damages to compensate him on the basis that he did mitigate. This principle clearly reduces the impact of the idea that damages in contract are primarily seeking to protect the expectation interest. As specific performance requires the contract as agreed by the parties to be performed it is the remedy which most closely protects the expectation interests of the parties.