| Wasted expenses incurred in reliance on the validity of a contract or in reliance on obtaining performance are losses of reliance interest and the criteria for limiting their compensation have a logical basis for integration. When there is an ascertainable performance interest, compensation for wasted expenses should be limited to the performance interest, so as to avoid the transfer of the risk of mis-assessment from the creditor to the debtor. Even if the performance interest is curtailed by the application of the rule of foreseeability or the rule of contributory negligence, compensation for wasted expenses should also be limited to the compensable performance interest, so as to avoid frustrating the normative purpose of limiting compensation for performance interest. Based on the homogeneity of foreseeability and equivalent causation as well as the possibility of legal interpretation, the rule of foreseeability should be applied to the limitation of compensation for wasted expenses. In determining the foreseeability of expenses incurred, a distinction should be made between typical and atypical expenses, the former being foreseeable. When the creditor aims at profitability, atypical expenses are not compensable if there is no express or implied agreement in the contract. When the creditor does not aim at profitability, atypical expenses are compensable to the extent of the value of the creditor’s performance. To the extent of the compensable performance interest, wasted expenses are compensable and they are subject no longer to the rule of foreseeability or the narrow rule of contributory negligence, but only to the rule of mitigation. When the performance interest is uncertain or non-existent, the functional differences between the rule of foreseeability and the rule of contributory negligence should be recognized, and they both perform the function of limiting compensation for wasted expenses. |
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