5 Types of Damages That May Be Awarded for a Breach of Contract

A contract is a legally binding agreement between two or more parties. When one party does not meet all of their obligations as specified in the agreement, this is considered a breach of contract. These breaches can range from minor infractions to serious violations. Disputes over alleged contract breaches may lead to litigation, and the parties may need to settle these issues in court.

If a breach of contract has occurred, the injured party may be entitled to damages, or monetary payments made by the party who committed the breach. There are several types of damages that may be awarded in breach of contract cases. Understanding these different categories can help business owners determine what they might be able to receive in these situations. To ensure that damages will be assessed correctly, it is important to work with an attorney who has experience representing clients in breach of contract cases.

1. Compensatory Damages

These damages are meant to compensate the non-breaching party for any direct losses they experienced due to the breach of contract. Damages may address the financial harm suffered by the non-breaching party, such as lost profits or additional expenses incurred as a result of finding an alternative solution.

Consequential compensatory damages, also known as special damages, may also be available in certain situations. These damages cover indirect losses that were foreseeable at the time the parties entered into the contract but were not directly related to the breaching party’s failure to fulfill their obligations. For example, if a vendor did not provide goods within the timeframe specified in a contract, this may have prevented the other party from fulfilling their own orders, leading to a loss of future business from customers. Consequential damages may address losses related to these issues, including the loss of future income.

2. Liquidated Damages

Liquidated damage clauses are predetermined amounts specified within contracts themselves. The terms of a contract may state that a party who does not meet specific requirements as outlined in the agreement will pay damages to the other party. During litigation, the court may look at whether these conditions have been met. If so, the terms of the contract may be enforced, and the breaching party may be required to pay the damages specified in the contract.

3. Nominal Damages

These damages are symbolic in nature, and they may be awarded when a breach of contract has occurred, but there have been no actual financial losses suffered by the non-breaching party. The breaching party may be required to pay a small sum that conveys legal recognition of wrongdoing without having a significant effect on either party’s financial situation.

4. Restitutionary Damages

In some cases, the court may order the rescission of the contract, which will invalidate the agreement going forward. After the contract is cancelled, the parties may be restored to their original positions prior to signing the contract, and to do so, the court may required the breaching party to pay restitution.

5. Punitive Damages

In cases where a breach of contract involved egregious misconduct or intentional fraud, the court may award punitive damages on top of any other damages or requirements. Punitive damages are meant to serve as punishment, and they serve as a deterrent against illegal behavior or other forms of misconduct by the breaching party or others.

Contact Our Naperville Contract Litigation Attorney

If your business has suffered financial harm because of a breach of contract, it is important to consult with an experienced attorney to determine your legal options. At the Gierach Law Firm, our DuPage County breach of contract lawyer understands how to address these issues effectively, and we can work to resolve contract disputes efficiently while protecting your rights. To learn more about how we can help you seek compensation or other remedies for a breach of contract, contact us at 630-756-1160 and set up a consultation.