Opinion ID: 2054163
Heading Depth: 2
Heading Rank: 1

Heading: General Principles of Contract Damages

Text: Under Iowa law, when a contract has been breached the nonbreaching party is generally entitled to be placed in as good a position as he or she would have occupied had the contract been performed. Magnusson, 560 N.W.2d at 27; see also Restatement (Second) of Contracts § 344(a) (1979); 22 Am.Jur.2d Damages § 43 (1988). This type of damages is sometimes referred to as the injured party's expectation interest or benefit of the bargain damages. Magnusson, 560 N.W.2d at 27 (citing 22 Am.Jur.2d Damages § 45). Under this theory of damages, the nonbreaching party's recovery is limited to the loss he has actually suffered by reason of the breach; he is not entitled to be placed in a better position than he would have been in if the contract had not been broken. 22 Am.Jur.2d Damages § 45 (1988) (emphasis added). In determining the amount of damages, we must also be mindful that the measure of damages recoverable for a breach of contract in each case must have relation to the nature and purpose of the contract itself, as viewed in connection with the character and extent of the injury. Id. § 44. In addition, courts must also consider the foreseeability of damages. In Kuehl v. Freeman Bros. Agency, Inc., 521 N.W.2d 714, 718 (Iowa 1994), we stated: [D]amages based on breach of a contract must have been foreseeable or have been contemplated by the parties when the parties entered into the agreement.... Damages which a reasonable person would expect to follow from breach of a contract are direct and thus should be awarded.