Damages

From wikilawschool.org. Wiki Law School does not provide legal advice. For educational purposes only.

Damages, in Contract law in the United States, refers to monetary remedy. When an enforceable contract is breached, the injured party will have a right to damages from the breaching party.

Amount of money[edit | edit source]

The amount of money for damages is set

  • by the contracting parties as liquidated damages or
  • by a court as nominal, expectation, or reliance damages

.

Nominal damages[edit | edit source]

When there is no actual loss to the injured party or the loss isn't provable, the court may still award a small sum as nominal damages if there was a technical breach in the contract.

Expectation damages[edit | edit source]

If there is a significant amount of provable loss & the contract doesn't contain a provision for liquidated damages set by the parties, then the court will determine & award expectation damages (or reliance damages) to the injured party.

The court will set the amount of expectation damages to place the injured party to the position she would have been in had the contract been fully performed.

Reliance damages[edit | edit source]

Reliance damages are similar to expectation damages. However, the injured party may ask the court for reliance damages if she relied on the contract, lost benefits of the contract, but she cannot prove the lost profits with a clear estimate.

In determining the reliance damages, the court will take into account the expenditures of the injured party while she relied on the contract.

Limits on expectation (& reliance) damages: avoidability, foreseeability, & certainty[edit | edit source]

The injured party has a duty to avoid the loss or mitigate the loss of the contract if an alternative exists where the loss may be avoided without

  1. undue risk,
  2. undue burden, or
  3. humiliation.

Moreover, the injured party is limited in recovery by means of expectation damages based on foreseeability. The injured party may not be able to recover damages if the breach was easily and reasonably foreseeable.

Lastly, the injured party may not recover for losses that may not be established with reasonable ceretainty.

Punitive damages?[edit | edit source]

Under U.S. contract law, there is no punitive damages. Punitive damages is a hallmark of tort law. "Courts apply punitive damages in about 5% of verdicts." ( https://www.law.cornell.edu/wex/punitive_damages ).