What type of damages does a party recover through reliance interest?

Reliance interest damages are awarded to a party who has incurred expenses or incurred losses based on their reliance on the other party's promise or contract, effectively putting them in the position they would have been in had they not relied on that promise. These damages specifically cover costs or losses that were a direct result of reliance on the contract, such as expenditures made or losses suffered while preparing to fulfill the contract terms, but which may not necessarily be recoverable as part of other damage categories like compensatory or punitive damages.

This concept is crucial in contract law, especially in situations where a contract has been breached, and the non-breaching party has sustained costs while taking action based on the agreement. The idea is to restore the non-breaching party to the state they were in before they relied on the contract, rather than providing them a profit they expected to earn from the contract's successful performance.

The other options do not capture the essence of reliance interest as accurately. Consequential damages refer to secondary damage resulting from a breach but do not focus specifically on reliance expenses. Compensatory payments and liquidated damages have different contexts; compensatory damages provide a broader base of recovery, while liquidated damages are predetermined penalties for breach, not tied specifically to reliance