Types of Damages for Breach of Contract

What Are the Types of Damages Awarded in Breach of Contract Cases?

If an individual is successful in their breach of contract claim against the party that breached the contract, then they will be able to recover specific remedies and damages in accordance with the contract laws of their state. However, that person must first be able to prove all of the required elements in their breach of contract claim, including that there was a valid contract.

Although the exact legal definition for what is considered to be a valid contract will differ by state, in general, a contract is a document that records an agreement between two private parties which creates mutual legal obligations and provides certain legal rights. Importantly, a contract can be either oral or written. However, oral contracts are often more challenging to enforce. Further, some contract must be in writing in order to be considered valid.

A breach of contract is what occurs when a party to a valid contract fails to fulfill their duties and obligations under the terms of the agreement. In other words, the terms of a contract guide the parties to the contract as to what they must do, and how they must do it, in order to maintain their end of the contract.

Then, if one party to the contract does not adhere to the terms of the contract, they will be considered to be breaching that contract. As a result, the non-breaching party will then be allowed to take legal action and can file a civil lawsuit against the breaching party for damages that they suffered from the breach.

Contract breaches can occur in a variety of different contexts, including a partial breach or a complete breach. A court will generally assess whether the breach was substantial or minor, as this helps the court determine what damages for breach of contract are available.

In general, there are three main ways in which a party may be held liable for a breach of contract include:

• Anticipatory Breach: Also known as an anticipatory repudiation, an anticipatory breach occurs when the breaching party tells the non-breaching party that they will not be fulfilling the terms of their contract.
  • Then, once the other party has been notified of the breach, they may sue for breach of contract;
  • In minor breach cases, the entire contract has not been violated and can still be substantially performed in most cases.
  • Examples of minor breaches include technical errors within the contract, such as a wrong date, price, or typo within the terms of the contract; and
  • In these cases, the breach is so substantial that it essentially cancels the contract, due to the fact that it renders performance by either party impossible.

  In addition to the above types of breaches, examples of other ways that a contract can be breached include:

  • If the contract is fraudulent;
  • If the contract was formed illegally;
  • If the contract is unconscionable; and
  • If there is a mistake of fact present in the contract terms.

  Once one party is able to prove that a breach of contract has occurred, they will then be allowed to sue the breaching party for damages. In general, the most common type of damage awarded in a breach of contract action is compensatory damages.

  The term compensatory damages covers both general damages and specific damages. General damages are damages that are meant to cover losses that are directly related to the subject matter of the contract, such as failing to meet a set number of shipments.

  Specific damages, on the other hand, are damages that are meant to compensate the non-breaching party for losses related to the breach, but not resulting directly from the breach. For example, damages that are related to a business’ reputation.

  In addition to compensatory damages, there are other damages that may be available for a breach of contract action. Examples of other types of damages in contract law available for breach of contract actions, include:

  • Restitutional Damages: The purpose of restitution damages is to restore the non-breaching party to the position they were in before a contract was formed, such as refunding them what they put forward in the contract;
  • Liquidated Damages: Liquidated damages are a pre-set amount of damages that is meant to reflect an estimate of the actual damages a party should receive, should a contract breach occur.
    • A liquidated damages clause will often appear in contracts where the subject matter may complicate the process to predict the amount of actual damages;
    • Because these damages reflect more of a matter of contract principles, nominal damages can oftentimes be as low as one dollar;
    • This type of damages is intended to recover the reasonable value of services performed by one party for another;
    1. Are There Other Contract Remedies Available?
    2. Do I Need a Lawyer for Help with Breach of Contract Damages?

    Are There Other Contract Remedies Available?

    As mentioned above, there are other contract remedies that are available outside of monetary damage awards. These damages are known as remedies in equity, and include legal remedies such as:

    • Specific Performance: Specific performance is an equitable remedy that refers to an instance in which the court forces the breaching party to perform the duty, or deliver the goods or service, they agreed to in the contract;
    • Termination of Contract: Termination of contract refers to a specific clause within the contract which states the reasons that a contract may be terminated, as well as the amount of compensation that will be owed to the non-breaching party if the breaching party decides to cancel the contract;
    • Injunctions: Similar to specific performance, and injunction is an equitable remedy where the court orders a party to refrain from doing something under the terms of the contract;
    • Rescission of Contract: Contract rescission occurs when a contract is voided or annulled by a court, thereby rendering the contract legally unenforceable; and/or
    • Rectification or Reformation: In the case of minor breaches, the contract may oftentimes be rewritten in order to reform the contract and make the contract workable for all parties involved.

    Do I Need a Lawyer for Help with Breach of Contract Damages?

    If you are involved in a legal issue involving a breach of contract, it may be in your best interests to consult with an experienced business lawyer. An experienced breach of contract lawyer will be able to help you understand your state’s specific laws regarding contracts, as well as the types of damages that are available for a breach of contract action.

    Additionally, an attorney will be able to review your contract in order to ensure that you entered into a valid contract. Further, an attorney will also be able to initiate a breach of contract action on your behalf. Importantly, many states allow for an attorney that is successful in a breach of contract claim to automatically recover their attorneys’ fees from the other party. Finally, an attorney can also represent you in court, as needed.

    Save Time and Money - Speak With a Lawyer Right Away

    • Buy one 30-minute consultation call or subscribe for unlimited calls
    • Subscription includes access to unlimited consultation calls at a reduced price
    • Receive quick expert feedback or review your DIY legal documents
    • Have peace of mind without a long wait or industry standard retainer
    • Get the right guidance - Schedule a call with a lawyer today!

    Need a Contract Lawyer in your Area?

    By State

    LegalMatch Legal Writer

    Travis earned his J.D. in 2017 from the University of Houston Law Center and his B.A. with honors from the University of Texas in 2014. Travis has written about numerous legal topics ranging from articles tracking every Supreme Court decision in Texas to the law of virtual reality. In his spare time off from the legal world and quest for knowledge, this 3rd degree black belt and certified instructor aspires to work with various charities geared towards bringing access to entertainment and gaming to all persons. Read More

    Travis earned his J.D. in 2017 from the University of Houston Law Center and his B.A. with honors from the University of Texas in 2014. Travis has written about numerous legal topics ranging from articles tracking every Supreme Court decision in Texas to the law of virtual reality. In his spare time off from the legal world and quest for knowledge, this 3rd degree black belt and certified instructor aspires to work with various charities geared towards bringing access to entertainment and gaming to all persons.

    LegalMatch Legal Writer