Damages

Question 1

an amount of damages stated in a contract in advance of any breach. If there is a valid clause in a contract, it will be the sole remedy available upon a breach of the contract. In order for such a clause to be found valid, it must be shown that it is based on anticipated damages as opposed to being a mere penalty. This is shown through establishing that damages would have been difficult to ascertain at the time the contract was made, and the amount set is a reasonable forecast of what damages would be.

Answer 1

Liquidated Damages

Question 2

include both general and special damages, and are awarded to the non-breaching party to place that party in the same position that he or she would have been in, had the contract been performed as agreed.

Answer 2

Compensatory Damages

Question 3

this term reflects the “foreseeability” requirement that arose out of the case of Hadley v. Baxendale years ago in England. It was held in this case that compensation in a breach of contract case should be given only for those injuries that the defendant, at the time the contract was made, had reason to foresee as the probable result of his or her breach. Damages that are unforeseeable will be held too remote and, therefore, uncollectible.

Answer 3

Consequential or Special Damages

Question 4

Where possible, the court will award compensatory damages according to the calculation of what the plaintiff expected to receive from performance of the contract. Also referred to Expectancy Measure of Compensatory Damages.

Answer 4

Expectation Damages

Question 5

When the expectancy cannot be calculated to a reasonable certainty, then the court may award damages according to the calculation of what the plaintiff expended in reliance on the contract. Essential reliance damages are expenses incurred in the performance or preparation for performance of a contract and need not be foreseeable. Incidental reliance damages are foreseeable expenses incurred because of the contract.

Answer 5

Reliance Damages

Question 6

given by the court to a non-breaching party who has suffered no damages or who has been unable to prove damages at trial, but who nevertheless has been wronged and is entitled to a judgment for technical breach of contract.

Answer 6

Nominal Damages

Question 7

damages that are granted to a plaintiff to punish the defendant for malicious, wanton or willful conduct and are awarded to make an “example” of the defendant’s conduct; so that such conduct will not be repeated again. Not typically allowable for breach of contract.

Answer 7

Punitive or Exemplary Damages

Question 8

efforts of the non-breaching party to use ordinary care to mitigate, or limit, the damages caused by the other party’s breach.

Answer 8

Mitigation of Damages