Different Types of Damages for Breach of Contract

Breach of Contract Different Types of Damages for Breach of Contract

How To Claim Damages for Breach of Contract

You can suffer significant loss or harm if you have entered a contract with a party that does not perform their agreed-upon obligations.

While you can sue the other party for damages for breach of contract, you can also try to reach an out-of-court settlement.

This article presents information about different types of damages you can receive and shows you a way to resolve your dispute without lawyers and judges.


When Can You Sue for Breach of Contract Damages?

You can sue the breaching party for damages when that party has not fulfilled or does not intend to fulfill their contractual obligation to you.

For your claim to be successful, you need to prove the elements of breach of contract, i.e., the following:

  • Existence of a contract between you and the breaching party
  • Material performance of commitments under the contract
  • Breaching party’s failure to perform their contractual obligations (e.g., a material breach of contract)
  • Damages you have suffered due to breach

Types of Damages for Breach of Contract

Here is a list of damages a court can award in case you initiate legal proceedings:

  1. Compensatory
  2. Nominal
  3. Liquidated
  4. Ordinary or general
  5. Punitive
  6. Equitable remedies

Compensatory Damages for Breach of Contract

The purpose of compensatory damages is to put you—the injured party—in the place where you would have been if the breach of contract had not happened.

The following table presents two sub-types of compensatory damages:

Expectation Damages Consequential Damages
These damages for breach of contract:

  • Cover what you have expected to get from the original agreement
  • Are calculated based on either the:
    • Market values
    • Original contract terms
This type of damages reimburses you for indirect damages not covered in the contract (e.g., you have lost profits because of undelivered service or goods).

Keep in mind that you must prove damages were either:

  1. A direct result of a breach of contract
  2. Foreseen as a result of the breach when you signed the contract

Nominal Damages

If you have not suffered any real harm or monetary loss, a judge might award you nominal damages to show you are in the right.

Nominal damages are usually:

  • Symbolic in nature
  • Insignificant—The injured party can receive $1 in nominal damages

Liquidated Breach of Contract Damages

Liquidated damages are specified in the contract when:

  • It is difficult to foresee damages
  • An estimate is necessary for damages in case of a breach of contract
  • Both contractual parties agreed upon these damages when they entered the contract

Keep in mind that:

  1. You should put a reasonable amount of liquidated damages
  2. A judge can refuse to award liquidated damages if they find them excessive
  3. Some state laws limit the liquidated damage amounts

Ordinary or General Damages

Ordinary or general damages originate from a natural, ordinary, or probable course of events from a contract breach.

Courts award these damages to compensate the injured party and not to punish the breaking party.

Punitive Damages Awarded for Breach of Contract

Punitive damages can be awarded to:

  • Punish the breaching party (unless they raise affirmative defenses)
  • Put off both contractual parties from committing breaches

Courts usually award these damages in tort or fraud cases and rarely in breach of contract ones.

Equitable Remedies

If a judge finds monetary damages to be insufficient compensation for you, they might award equitable remedies for breach of contract.

In this case, a court could order the breaching party to act or not act in a certain way. Here are some examples:

  • Specific performance—For instance, the breaching party has to perform their obligations
  • Contract rescission—The original agreement is terminated and a new one created
  • Contract reformation—The old agreement is amended to present the true intent of both contractual parties

What To Do Before Suing for Damages for Breach of Contract

Since litigation can be time-consuming and costly, you should send a demand letter to the breaching party first.

Keep in mind that:

  • Most cases are settled outside of court
  • Before suing the other contractual party, some U.S. states require you to:

Register for DoNotPay to generate an airtight demand letter and resolve your dispute successfully.

DoNotPay Helps You Deal With a Breach of Contract Efficiently

You do not have to spend a lot of:

  1. Money on hiring a lawyer to draw up a demand letter and negotiate with the other contractual party
  2. Time and energy trying to understand legal requirements and adjust various demand letter templates to your specific circumstances

Our AI-powered app is familiar with different state laws and can generate a demand letter on your behalf in a matter of minutes.

Subscribe to DoNotPay and take these steps:

  1. Find the Breach of Contract product
  2. Answer our chatbot’s questions to provide information about your agreement
  3. Indicate the payment deadline
  4. Describe the performed services

When you have completed these simple steps, DoNotPay creates a watertight demand letter you can send to the breaching party and solve the issue swimmingly.

If the other party’s response is not favorable, we can also help you sue them in small claims court.

Learn About State-Specific Breach of Contract Practices

DoNotPay publishes helpful guides to help you deal with administrative issues as easily and efficiently as possible.

To learn about your state laws on breach of contract, you should check out the articles listed in the following table:

South Carolina Michigan Ohio
Colorado New York Illinois
Florida Georgia North Carolina
Delaware New Jersey California
Pennsylvania Virginia Arizona

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