Types of Damages Available for Breach of Contract

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How Can I Be Compensated for a Breach of Contract?

Contracts bind the parties of a contract to the terms of the agreement. As such, contracts form the basis of many business transactions and if one party breaches the agreement, the other party can be severely injured.

In order to discourage people from breaching a contract and also to compensate the injured party for any losses, the law provides several remedies for breach of contract: damages, specific performance, contract recession, and contract modification.

To resolve a breach of contract, you should consult a business lawyer as soon as possible.

What Are Damages?

Damages are monetary awards and can include:

1) Compensatory Damages: These are damages for a monetary amount that is intended to compensate the non-breaching party for losses that result from the breach. The aim is to "make the injured party whole again". There are two types of compensatory damages:

2) Liquidation Damages: Damages that are specifically stated in the contract. These are available when damages may be hard to foresee and must be a fair estimate of what damages might be if there is a breach. Both parties determine what would be an appropriate amount during contract negotiations.

3) Punitive Damages: These are damages that are intend to punish the breaching party and to deter him or her from committing any future breaches. They are rarely awarded in contract cases, though they may be available in some fraud or tort cases that overlap with contract law.

4) Nominal Damages: These are damages that are awarded when the injured plaintiff does not actually incur a monetary loss, but the judge wants to show that the winning party was in the right. These are typically rarely awarded in contract cases because breaches of contract usually involve some sort of loss to one party, however they might be awarded in tort cases that cross over with a breach of contract case.

5) Restitution: These are not really legal damages per se, but rather are an equitable remedy awarded to prevent the breaching party from being unjustly enriched. For example, if one party has delivered goods but the other party has failed to pay, the party that delivered the goods may be entitled to restitution, i.e. the cost of the delivered goods, in order to prevent the unjust enrichment.

What Other Remedies Are Available If There Has Been a Breach of Contract?

Relief for contract breaches can come in two forms: legal damages, which are the monetary awards discussed above, and equitable remedies.

Equitable remedies are typically awarded when monetary damages will not properly remedy the situation. They involve the court ordering the parties to act or to refrain from acting. Types of equitable remedies include:

Do I Need an Attorney?

A business lawyer can help you understand which types of remedies are available to you under legal or equitable principals. The law of contracts can often change from region to region, as well as over time. Working with an attorney can help ensure that you are familiar with the various types of remedies that might be available.

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Last Modified: 09-19-2014 03:38 PM PDT

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