When a contract has been breached, it can result in extensive damages for a business or individual. For that reason, businesses impacted by a breach of contract should be familiar with the different types of damages that may be available in a dispute over breach of contract.
Monetary damages
Monetary damages include:
- Compensatory damages are intended to compensate the injured party for the breach and put them back in the same position they would have been in had they not suffered the breach.
- Liquidated damages refers to an amount of damages specified in the contract that are a reasonable estimate of the damages that would result from an anticipated breach.
- Punitive damages are rarely available in breach of contract situations but are a type of damages intended to punish a bad actor for wrongful acts.
- Nominal damages may be awarded in a small amount to acknowledge that a breach of contract has occurred although the injured party suffered little if any monetary loss.
Specific performance
In addition to monetary damages, there are several other different types of remedies for a breach of contract. Specific performance is a remedy that takes place when the court orders the breaching party to perform their obligations under the contract.
Rescission of the contract
The court can also order that the contract be cancelled, or rescinded, and may also require restitution from the breaching party to the non-breaching party if the party in breach has already received some value from the contract.
A contract dispute can have a disruptive effect on the injured party’s business. For that reason, they should understand the different types of damages they may be able to collect by making a breach of contract claim for damages.