CIV § 3343

CIV § 3343: Out-of-pocket difference + additional damages

Defrauded in a property sale? CIV § 3343 gives out-of-pocket difference plus additional damages: reliance, loss of use, lost profits (if conditions).

Official text CIV § 3343 — California
  • (a) One defrauded in the purchase, sale or exchange of property is entitled to recover the difference between the actual value of that with which the defrauded person parted and the actual value of that which he received, together with any additional damage arising from the particular transaction, including any of the following:
  • (1) Amounts actually and reasonably expended in reliance upon the fraud.
  • (2) An amount which would compensate the defrauded party for loss of use and enjoyment of the property to the extent that any such loss was proximately caused by the fraud.
  • (3) Where the defrauded party has been induced by reason of the fraud to sell or otherwise part with the property in question, an amount which will compensate him for profits or other gains which might reasonably have been earned by use of the property had he retained it.
  • (4) Where the defrauded party has been induced by reason of the fraud to purchase or otherwise acquire the property in question, an amount which will compensate him for any loss of profits or other gains which were reasonably anticipated and would have been earned by him from the use or sale of the property had it possessed the characteristics fraudulently attributed to it by the party committing the fraud, provided that lost profits from the use or sale of the property shall be recoverable only if and only to the extent that all of the following apply:
  • (i) The defrauded party acquired the property for the purpose of using or reselling it for a profit.
  • (ii) The defrauded party reasonably relied on the fraud in entering into the transaction and in anticipating profits from the subsequent use or sale of the property.
  • (iii) Any loss of profits for which damages are sought under this paragraph have been proximately caused by the fraud and the defrauded party’s reliance on it.
  • (b) Nothing in this section shall do either of the following:
  • (1) Permit the defrauded person to recover any amount measured by the difference between the value of property as represented and the actual value thereof.
  • (2) Deny to any person having a cause of action for fraud or deceit any legal or equitable remedies to which such person may be entitled.

Text as published in the 2026 snapshot of the code.

Source: Vaquill Open US Law, compiled from official state publishers (huggingface.co), reproduced under license CC BY 4.0.

Read this provision at the official source →

What it actually says

Section 3343 sets a special measure of damages for fraud in the purchase, sale or exchange of property, and it is deliberately different from the general tort rule in § 3333. Subdivision (a) gives the defrauded person the difference between the actual value of what they parted with and the actual value of what they received — the out-of-pocket rule — together with additional damage arising from the particular transaction.

The additional damages are listed. Amounts actually and reasonably expended in reliance on the fraud. An amount compensating for loss of use and enjoyment of the property to the extent proximately caused by the fraud. Where the defrauded party was induced to sell or part with property, an amount compensating for profits or other gains that might reasonably have been earned by using it had they kept it. And where the defrauded party was induced to buy, lost profits or gains reasonably anticipated from using or selling the property had it possessed the characteristics fraudulently attributed to it — but only if three conditions are all met: the property was acquired for the purpose of using or reselling it for profit, the defrauded party reasonably relied on the fraud both in entering the transaction and in anticipating profits, and the lost profits were proximately caused by the fraud and the reliance.

Subdivision (b) contains the exclusion that defines the section: it does not permit recovery of the difference between the value of the property as represented and its actual value. That is the benefit-of-the-bargain measure, and this section refuses it — you recover what you lost, not what you would have gained if the lie had been true. Subdivision (b)(2) preserves any other legal or equitable remedies a person with a fraud or deceit claim may have. Which valuation date and which figures apply to your transaction is a question for a lawyer and often for an appraiser.

When it applies

  • A used car sold on false assurances about its condition or history
  • A house bought after the seller concealed a serious defect
  • A business bought on figures that were not real
  • You were talked into selling something cheaply on false information
  • You spent money on the property in reliance on what you were told
  • The item you bought was to be resold at a profit that never materialised

What this section does not say

  • It does not give you the bargain you thought you had. Subdivision (b)(1) expressly excludes the difference between the value as represented and the actual value.
  • It is not the general tort measure. Section 3333 gives all detriment proximately caused; this section substitutes an out-of-pocket rule for fraud in a purchase, sale or exchange of property.
  • Lost profits are tightly conditioned. The buyer's lost-profits claim requires purchase for use or resale at a profit, reasonable reliance both in entering and in anticipating profit, and proximate causation.
  • It does not establish the fraud. The elements come from § 1572 or §§ 1709 and 1710; this section only measures what follows.
  • It does not exclude other remedies. Subdivision (b)(2) preserves the legal and equitable remedies otherwise available, including rescission under § 1689.

Worked examples

Invented situations, written to show how the wording bites. They are not real cases, not judgments and not precedent, and nothing here predicts what would happen in yours.

Illustrative example

A buyer pays a set price for a used car after being assured the transmission had just been rebuilt. It fails within days, and the buyer wants the difference between what the car would have been worth as described and what it is actually worth.

How the wording applies

Section 3343 gives the out-of-pocket measure, the difference between what was paid and the value of what was received, and subdivision (b)(1) expressly refuses benefit-of-the-bargain damages. The fact this turns on is the actual value of the car as it really was, not its value as represented, together with additional damage proximately caused such as the towing and the inspection.

How the parties settled it

The seller refunds the difference between the price paid and an agreed market value for a car in that condition, plus the towing and inspection costs, and the buyer keeps the car.

Illustrative example

A buyer purchases a house after the seller conceals a structural problem, then spends money on a new kitchen before discovering it.

How the wording applies

Subdivision (a) allows amounts actually and reasonably expended in reliance upon the fraud, on top of the out-of-pocket difference. It hinges on reliance and timing: money spent before the fraud was discovered, on the footing that the property was as represented, is within the measure, while improvements made afterwards are the buyer's own choice.

How the parties settled it

The seller pays an agreed sum reflecting the difference in value and contributes to the cost of the works already carried out, in full settlement, with the buyer keeping the house.

How courts have read it

Decisions construing this provision. The question and the summary are ours; the quoted sentence is the court's own words, taken from the published opinion. These are the decisions in our corpus, not every decision there is, and nothing here predicts any other case. Reported 1991 to 2017.

Green Wood Industrial Co. v. Forceman International Development Group, Inc., 156 Cal. App. 4th 766 (2007)

Court of Appeal

What the court had to decide

Whether a plaintiff defrauded in a transaction governed by the California Uniform Commercial Code may recover lost profits as damages, notwithstanding the out-of-pocket limitation of Civil Code section 3343.

What it held

The court held that California Uniform Commercial Code section 2721 is an exception to the general out-of-pocket loss rule of Civil Code section 3343, and therefore a buyer defrauded in a sale of goods may recover benefit-of-the-bargain damages, including lost profits.

In the court's words
California Uniform Commercial Code section 2721 represents an exception to the general rule in California, embodied in Civil Code section 3343, that a plaintiff defrauded in the purchase or sale of property may recover only out-of-pocket loss.

Baxter v. Peterson, 150 Cal. App. 4th 673 (2007)

Court of Appeal

What the court had to decide

What is the proper measure of damages for fraud in a purchase or sale of property under Civil Code section 3343?

What it held

The court held that Civil Code section 3343 does not permit a benefit-of-the-bargain measure of damages; instead, the proper measure is the out-of-pocket loss plus any additional damages specified in the statute.

In the court's words
The trial court also erroneously instructed the jury that Baxter was entitled to a benefit-of-the-bargain measure of damages in connection with his fraud claim, contrary to Civil Code section 3343.

Fragale v. Faulkner, 110 Cal. App. 4th 229 (2003)

Court of Appeal

What the court had to decide

Does Civil Code section 3343 limit damages for intentional misrepresentation by a fiduciary to out-of-pocket losses?

What it held

The measure of damages in a case of intentional misrepresentation by a fiduciary is not limited to out-of-pocket losses under Civil Code section 3343; instead, the broader measure under Civil Code section 3333 applies.

In the court's words
the measure of damages in a case of intentional misrepresentation by a fiduciary is not limited to out-of-pocket losses

Jue v. Smiser, 23 Cal. App. 4th 312 (1994)

Court of Appeal

What the court had to decide

May a purchaser of real property who learns of potential material misrepresentations about the property after execution of a purchase agreement—but before consummation of the sale—close escrow and sue for damages?

What it held

A purchaser who learns of potential misrepresentations after signing a purchase agreement but before closing may still close escrow and sue for damages, because reliance at the time the initial contract was struck is sufficient under Civil Code section 3343.

In the court's words
May a purchaser of real property who learns of potential material misrepresentations about the property after execution of a purchase agreement—but before consummation of the sale—close escrow and sue for damages? Our answer is, “yes.”

Housley v. City of Poway, 20 Cal. App. 4th 801 (1993)

Court of Appeal

What the court had to decide

Whether fraud damages for inducing a property owner to sell part of his land must be limited to the out-of-pocket measure under Civil Code section 3343.

What it held

The court held that fraud damages in this case must be limited to those permitted under Civil Code section 3343, i.e., out-of-pocket loss (the value of the land taken for the slope) together with any other damages within the scope of that section.

In the court's words
Accordingly, fraud damages must be limited to those permitted under Civil Code section 3343, that is, out-of-pocket loss (here, the value of the land taken for the slope) together with any other damages within the scope of section 3343.

Kenly v. Ukegawa, 16 Cal. App. 4th 49 (1993)

Court of Appeal

What the court had to decide

Under Civil Code section 3343, subdivision (a)(4), may a defrauded party recover lost profits from the resale of property that he never acquired?

What it held

No, lost profits are not recoverable under section 3343(a)(4) when the defrauded party never acquired the property from which the profits were expected; only out-of-pocket losses may be recovered.

In the court's words
That language clearly contemplates that the party actually acquire the property in question, i.e., the property from which profits were to be realized.

Source: Caselaw Access Project, CC0 1.0 Universal (public domain dedication).

Related sections

CIV § 1572 Actual fraud: 5 types under California CIV § 1572 CIV § 1709 Liable for damage from willful deceit: CIV § 1709 CIV § 1710 4 kinds of deceit under CIV § 1710 CIV § 3333 Full Compensation for All Detriment Caused | CIV § 3333

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We copy this text from the official publisher and re-check it against that source on every page load, but we cannot guarantee it is complete, current or free of error, and we accept no liability for any reliance on it. An amendment can take effect before a consolidation catches up. The publisher's own copy is linked below; where the two differ, it is the official one that counts.

This page reproduces the text of CIV § 3343 in force at the date shown and explains it in general terms. It is not legal advice and takes no account of the circumstances of your case, which can change the answer completely. For a live dispute, for limitation periods, and before taking any step in court, consult a qualified lawyer in California.

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