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How Are Damages Quantified in A Breach of Contract?

Burgoyne Law Offices Dec. 6, 2021

You expect the other party to adhere to the terms and deliver when entering a contract. However, they may fail to live up to expectations for various reasons, causing losses to your business.

While the breach may be apparent, the effects may not be obvious at first, as they could end up affecting several aspects of your business. Legally, you are entitled to damages brought about by the breach, but how exactly are your losses determined?

The Are Several Types of Damages

There are several types of damages that you may receive due to the breach. They include:

  • Compensatory damages cover the losses you incurred as a result of the breach

  • Nominal damages are awarded when there is a breach without a resulting monetary loss

  • Liquidated damages specified by the contract in case of a breach, among others

Calculating Damages

The amount of compensation you receive from a breach of contract is not meant to enrich you. Instead, it is intended to place you in the financial position you would have been in had the contract been performed. The amount varies depending on the type of contract and the amount of losses you incurred.

If the losses caused by the breach are not quantifiable and damages may not be enough remedy, the court may order specific performance as an alternative. Here, the court orders the party in violation to perform a specific duty in the contract, such as complete the execution of the contract.

Protect Your Business Interests

Given that a breach of contract can set your business back financially, you need to know what to do to recoup your losses. Keep in mind that your contract may have some legal loopholes that the other party might exploit. Therefore, you need to navigate your case carefully and ensure that your business interests come on top in the end.