When you enter a contract with another party, the signed document sets forth the obligations of each party and provides protections if one of the parties breaches the agreement. The breach of the contract can cause considerable problems for the other party, so the law provides that certain damages or losses can be recovered by the non-breaching party. The most common form of damages recovered in a breach of contract action is a monetary award. Below are the four general categories of monetary awards:
● Compensatory Damages. Compensatory damages are aimed at reimbursing the plaintiff for actual damages suffered. The plaintiff must show the specific amount of the loss or harm suffered to support a monetary award that will make them whole again. The two forms of compensatory damages are expectation damages and consequential damages. Expectation damages focus on what the plaintiff expected to obtain from the contract. Consequential damages include indirect damages that are outside the scope of the contract, but the loss occurred as a direct result of the breach.
● Punitive Damages. As indicated by the name, punitive damages are intended to punish the party for wrongdoing and to deter other similar behavior. It is rare for the court to award punitive damages and they are most typically awarded when the party has committed an intentional tort with the intent to harm. Punitive damages are available in cases that have an overlap with fraud or other forms of tort law.
● Liquidation Damages. If the contract sets forth certain damages that are available in the event of a breach, they are referred to as liquidated damages. This type of provision in an agreement can be negotiated by the parties in order to make it easier to calculate the appropriate monetary award in a case where it would otherwise be difficult to determine.
● Nominal Damages. The court may award nominal damages in a case where the plaintiff has proven there was a breach of contract, but very little monetary loss resulted from the breach. Nominal damages, such as an award of one dollar, are used to indicate that the plaintiff “won.” Nominal damages are rare in breach of contract cases because monetary loss can typically be established by the plaintiff.
If you are involved in a breach of contract claim, you may be entitled to recover more damages than you might expect. Contact our office today to schedule an appointment with one of our knowledgeable attorneys. We can help make sure you obtain the best possible outcome in your case.