What is the expectation interest in contract law?

The expectation interest in contract law focuses on placing the injured party in a position they would have been in had the contract been fully performed as originally agreed. This principle is designed to fulfill the primary purpose of contracts, which is to ensure that the parties involved receive the benefits they anticipated when entering into the agreement. Thus, if one party breaches the contract, the expectation interest allows the non-breaching party to recover damages that align with the expected benefits of the contract, thereby making them "whole" based on the original terms.

In contrast to other choices, the focus on compensation for incurred expenses does not account for the overall value of the contract’s benefits, which can go beyond mere costs. Additionally, the notion of penalizing the breaching party is not aligned with the remedial nature of contract law, which seeks to restore rather than punish. Furthermore, remedies for emotional distress are typically not part of contract law remedies, which emphasizes economic losses rather than personal grievances. Therefore, the focus on restoring the party to the position they would have been in reflects the fundamental principle of expectation damages effectively.