Where a party has been induced by fraud to enter a contract, the Restatement of Torts permits the injured party to recover out-of-pocket damages but expressly excludes recovery of benefit-of-the-bargain damages.

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The Restatement (Second) of Torts allows for the recovery of both out-of-pocket losses and benefit-of-the-bargain damages in cases of fraud, recognizing the injured party's right to be placed in as good a position as they would have been had the representations been true. Benefit-of-the-bargain damages aim to cover what the defrauded party expected to gain from the contract, not just the actual financial losses incurred.

Where a Party Has Been Induced by Fraud to Enter