When someone has been injured — whether physically or financially — due to a breach of contract, damages are intended to restore the person to a position similar to where they were before the event. In general, the types of damages include compensatory, incidental, consequential, nominal, liquidated, and punitive. However, the types of damages that can be awarded in a lawsuit depend upon the type of case.
As the name suggests, these damages are intended to compensate the plaintiff for their loss. These can be straightforward to calculate, such as the contracted payment for a service that was lost when the contract was breached. At other times, it can be more challenging to ascertain the true equivalent loss. If, for instance, there is no comparable service or product, it would become more difficult to compute the amount of damages to make the injured party whole.
Incidental damages are designed to cover the unintended expenditures that were necessary to mitigate the situation after a breach of contract. A simple example may be if your daycare closed without notice after you prepaid for a month. The amount of the prepayment would be compensatory damage. However, the amount you had to pay for a private nanny or alternate daycare because of the closing would be incidental damage.
These are damages that occur as a consequence of another’s action. For instance, you are a caterer who ordered a new commercial stove that was installed incorrectly, causing a gas leak that required the evacuation of the building. The gas was cut off, your food was ruined during the evacuation, and you were not able to complete your catering job in time, impacting your current and upcoming jobs. The consequence was the cost of food and the lost income caused by the incorrect installation.
If, in the instance above, if the caterer did not have to pay for the botched job, but they had to call another installer to correct it in plenty of time for the catering to be done, there would be minimal damage to the caterer.
If the amount of damages are difficult to assess, but the parties agree to a reasonable number for the award, those are called liquidated damages.
In a civil case for damages where the act was due to willful and malicious intent, punitive damages are meant to be not only a punishment but a deterrent for similar actions in the future.
If the acts of another have injured you, contact an experienced lawyer, like a personal injury lawyer from Hickey & Turim, in your state. He or she can advise you of your rights and available remedies under the law.