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Nominal Damages in a Contracts Claim

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What Are Damages?

Damages are awards given to individuals as compensation for an injury or a loss. In a contract dispute, damages are usually money awards.

The following are the most common damages for a contract claim:

What Are Nominal Damages?

Nominal damages are typically small amounts of money awarded to the plaintiff; sometimes the amount can be as low as $1. They are usually awarded for the following reasons:

The plaintiff did not suffer from any real financial loss, or the economic harm cannot be calculated
Because damages cannot compensate the plaintiff, nominal damages are awarded to show that the plaintiff was right in the lawsuit

In What Types of Contract Claims Can Nominal Damages Be Awarded?

Nominal damages, in a contracts claim, are very rare. They are rare because most breach of contract claims usually result in some form of economic loss to the non-breaching party.

There are, however, a few instances where nominal damages are awarded in contracts lawsuits. You should contact an attorney if your case contains:

  • Losses that cannot be calculated: Situations where the value of property cannot be determined
  • Mixed lawsuits: Contracts cases are often combined with tort claims, such as simultaneous fraud or coercion. Nominal damages may be awarded, though they will usually be directed towards the tort claim.
  • Bad faith contracts: Many courts award nominal damages where the breaching party has acted in bad faith through lying or deception. In this case the nominal damages express the court’s disapproval of the bad faith.

An example of nominal damages in a contracts claim: Abby and Beth enter into a contract, and Abby is to provide insurance for Beth. Abby fails to provide insurance, but Beth takes steps to insure herself. A court will probably not award losses to Beth since she has already insured herself. Since there are no losses, the court may award nominal damages to acknowledge that Abby failed to perform her contractual duty.

What Proof Is Required Before Issuing Nominal Damages?

The plaintiff will still need to prove all the essential elements of a breach of contract claim in order to receive nominal damages.t Since there is no economic harm, only the defendant’s wrongdoing must be proven before nominal damages can be awarded.

Why Are Nominal Damages Important If They Are Small?

The amount of money awarded in nominal damages may not be a lot, but they are still important because they may open the door to other types of damages. For example, punitive damages cannot be awarded unless the plaintiff is first awarded compensatory, nominal, or restitution damages.

Punitive damages are not usually awarded in contracts cases, except in the instances mentioned above involving bad faith or combined tort claims. In these types of cases, nominal damages become an important consideration when courts are calculating monetary awards.

Should I Get an Attorney?

Contract claims can be complex and challenging, especially when calculating losses. A contracts lawyer can help you with your matter and figure out if seeking nominal damages are appropriate for your case.

Photo of page author Jessica Tran

, LegalMatch Legal Writer

Last Modified: 03-05-2015 12:31 PM PST

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