How should damages for breach of warranty be measured?

Damages for breach of warranty in real estate transactions are fundamentally rooted in the concept of ensuring that the injured party is compensated adequately for the loss incurred due to the breach. When a warranty is breached, particularly regarding title defects, the damages must reflect both the economic impact of those defects and the reasonable costs associated with rectifying the situation.

The rationale behind the correct choice is that damages can be seen from two angles: first, the cost to remedy the title defect, which encompasses the expenses required to fix the issue, and second, the economic loss sustained as a result of the defect. This dual approach acknowledges that a breach not only affects the immediate financial investment but may also lead to broader economic implications, such as lost opportunities or decreased property value.

Furthermore, capping these damages at the price paid for the land, plus interest, establishes a clear boundary for compensation. This cap ensures that the damages do not exceed what the injured party originally invested into the property, promoting fairness and preventing excessive claims.

By incorporating both the cost to address the defect and any associated economic losses, alongside the safeguard of a damage cap, this comprehensive view allows for a balanced approach in real estate transactions when addressing breaches of warranty. This is integral to upholding the legal standards in