What damages can you recover from in the event of breach of contract?

If you are a party to a contract that has been breached, you have the potential to recover several different types of damages. Since contracts represent the basis of most business transactions, the threat of damages for breaching these agreements is necessary. Damages are the monetary awards provided to a party that has been wronged as a result of a breach of contract. With the help of an experienced attorney, parties who’ve suffered contract breaches can put up legal fights to obtain such damages.

The most common type of damages that result from a breach of contract are compensatory damages. This is money awarded to the party wronged by the breach to compensate for their financial losses. The intent of compensatory damages is to make the wronged party “whole again”. Under the umbrella of compensatory damages are expectation damages and consequential damages. Expectation damages are meant to provide the compensation that the wronged party was supposed to receive from the contract. The contract’s language typically shapes these damages. If the contract’s wording is unclear, market values will determine the amount of expectation damages.

Consequential damages are meant to reimburse the wronged party for the indirect damages that he has suffered. As an example, a business will lose profits if a key machinery or parts are not delivered and goods can’t be created. Yet in order to recover consequential damages, the wronged party must prove that harm has occurred that stems directly from the breach. It must also be proved that both parties could have reasonably foreseen this harm when they signed the contract. Oftentimes, this is quite challenging and business owners must rely on the legal knowledge of skilled attorneys.

Liquidation damages can also result from a breach of contract. These are damages that are specifically detailed in the contract itself. Usually, there is language in the contract that determines a fair estimates of damages in the event of a breach of contract. Punitive damages are meant to punish the party that breaches and dissuade him from breaching again in the future.

Nominal damages are awarded when the injured party does not suffer a monetary loss. The presiding judge uses these damages to express his opinion that the winning party is indeed correct. These are most often awarded in tort cases that overlap with breach of contract cases.

Restitution is considered to be an equitable remedy provided to prevent the party that committed the breach from becoming unjustly enriched. As an example, company A delivers a pallet of bulk candy to company B. Company B fails to pay, so company A is entitled to restitution in the amount of the candy that was delivered but not paid for.

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