Explaining "Betterment" and "First Cost" - Limitations Upon Available Damages.

Recovering damages does not give the claimant an open checkbook. There are legal restrictions upon the type and amount of damages for which claimants can recover.  Claimants must take all, reasonable efforts to mitigate their costs and damages. [See “Understanding the Mitigation of Damages Doctrine”, posted 1/20/25].  Claimants cannot destroy goods or services that substantially comply with the requested delivery, just to satisfy subjective needs and wants.  [See, "What Every Owner and Contractor Should Know About The “Economic Waste Rule”?, posted 2/22/23].  Claimants must then only seek damages that would put them in no better place then they would have been if the act or omission giving rise to the damages had never occurred. 

Finally, claimants must provide a credit for items and costs that they never paid for in the first place.  These latter two restrictions upon the recovery of damages are better known as the doctrines of “betterment” and “first costs”. In practice, “betterment" and ”first costs" are just opposite sides of the same coin. 

The foundations of the doctrine of “betterment” are found in its namesake.  The claimant seeks something better than what is deserved.  For example, a claimant cannot buy a Volkswagen, but once defects are found, demand the replacement be a Cadillac.  Claimants are only entitled to repair or replacement of the good or service purchased in the first place.  Of course, the doctrine of “betterment” does not restrict the claimant to the original purchase price, if such price has increased since the original purchase.  Nor does the doctrine of “betterment” limit the claimant to recovery of an equivalent good or service, if the good or service is no longer available. 

The doctrine of “first costs” is similar to “betterment” but focuses upon omissions during contracting as opposed to actions following breach.  Whereas “betterment” deals with replacing a Volkswagen with a Cadillac, “first costs” deals with buying a car, when none was purchased in the first instance.   “First costs” applies where a buyer contracts to purchase a good or service, and the resulting product omits a characteristic or feature not included in the purchase price.  Once the buyer discovers that the feature or characteristic was not included, what measure of damages should the buyer be entitled to recover?  Some would argue the buyer's damages should be measured by the amount required to place the buyer in the same position as if the contract had been fully performed.  However, the doctrine of “first costs” requires the buyer to give a credit for the original value of the good or service that was never paid for, restricting the buyer's damages to the additional replacement  costs for adding the missing feature or characteristic after the fact. Claimants cannot recover the “first costs” of the omitted feature or characteristic, but only the additional costs resulting from the omission.  

Claimant's should should always determine the the amount of damages they should reasonably expect to recover.  Otherwise they could invest more in the litigations than the claims are worth.  Yet, more often than not, claimants focus upon doctrines and theories that build up their damages, as opposed to those that place restrictions upon recovery.  In doing so, claimants set their hopes too high, drive up the costs of litigation, and make cases more difficult to settle. The doctrines of “first costs” and “betterment” are just 2 of the limitations upon damages required to evaluate a claimants recovery.