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What damages are available to help with contract breaches?

On Behalf of | Jan 5, 2022 | Business Law |

Contract breaches can be disruptive operationally and financially and in other ways as well. For that reason, it is essential for businesses to be familiar with legal protections and remedies that can help them with their contract damages.

Compensation options for contract damages

When there has been a contract breach, a legal claim may be able to help the nonbreaching party cover compensation to help offset those damages. The specific types of damages available depend on the situation and circumstances but, in general, contract damages can include compensatory damages which can be two types either general damages or special damages.

  • General damages: General damages may be awarded to cover the losses directly and necessarily incurred from the breach of contract. General damages are the most common type of damages awarded for breach of contract.
  • Special damages: Special damages, or consequential damages, may be awarded to cover any losses incurred from the breach of contract because of special circumstances or conditions that may not be ordinarily predicted. These are typically losses caused by the contract breach but not in a direct or immediate way. The breaching party must have knowledge of the special circumstance at the time the contract was signed.
  • Punitive damages: In addition, punitive damages may be available, however, they are commonly not awarded in contract breach situations.

Contract breaches can be devastating for businesses which is why nonbreaching parties harmed by a breach of contract should be familiar with the types of damages available to help make them whole again.