Breach of Contract and Resulting Damages

A breach of contract can result when there is a failure to perform any or all terms of an agreement, whether it’s written or oral. The breach of contract or failure can include any of the following:

  • not completing a job,
  • not paying (on time or at all),
  • not delivering goods ordered,
  • failure to provide proper notices or
  • any act that shows that the terms of the agreement will not be completed according to the intent of the parties to the agreement.

Simply put, a breach of contract occurs when any of the terms of the contract are broken.  In addition, through the acts or omissions of a party to a contract one may also find themselves on the other end of an “anticipatory breach” claim.

Contract Breaches: Material Breach vs. Anticipatory Breach

Material Breach of Contract

A material breach of contract means that a party or parties performs or fails to perform its obligations as agreed in the contract in such a way that the intent of the parties is destroyed. For example, if an electrician was contracted for safety purposes to utilize high-grade wires, but installs lower grade wires, he’s in breach of the contract. One of the intents of the contract involved safety, and the electrician disregarded it.

Anticipatory Breach of Contract

An anticipatory breach may be found when the other party won’t perform their agreed obligations undertaken.  This is different from a legal impossibility of performance.  On occasion if a party thinks that there is going to be a breach of contract by the other party it may request further assurances from that counterparty that it will perform the contract and that there will be no breach of contract.

Types of Legal Damages Resulting from a Breach of Contract

To collect damages in a successful lawsuit, the aggrieved party must prove that they have suffered some type of loss or damage(s) as a result of the breach of contract.

Damages may be in the form of:

  • money lost,
  • time lost,
  • loss of opportunity, or
  • any number of other types of loss.

The amount of monetary damages depends on how much money it will take to make the aggrieved party whole. This could be the value of the goods or services provided, lost profits or other compensatory damages.

Nominal Damages

Nominal damages can be awarded when a judge or jury finds that a party has been aggrieved by the act or omission of another but that no real harm or actual damages were incurred.  The amount of nominal damages may be a very small amount of money (for instance $1.00).

Liquidated Damages

Liquidated damages may be set forth in an agreement to compensate a party for loss that is real but which may be difficult to determine. Liquidated damages may not be imposed as a punishment, as punitive damages or a penalty.  The agreed liquidated damages amount must be roughly equivalent to the damages resulting from the act or failure to which the liquidated damage clause of a contract applies.

Actual Damages

Actual damages, also known as “compensatory damages,” refers to money to be paid for harm, loss or injury suffered by an aggrieved person due to an act or failure to act by another party.  Actual damages are real damages and are awarded to compensate someone for lost monetary value or the value of lost or damaged property.  This amount must be determined on the proven loss, injury, or harm suffered by the aggrieved party and on a real measure of the value of the loss, such as lost income or wages due to injuries resulting in unemployment, medical expenses and other specific losses.  The amount must be proven with a level of certainty and may not be speculative.  Actual damages do not include nominal or punitive damages.

Punitive Damages

Punitive damages or, exemplary damages, are intended to punish or deter the wrongdoer and others (by example) from engaging in the type of conduct that has caused harm to the injured party in a lawsuit.  The purpose of these damages is not to compensate the aggrieved party.  Punitive damages can be awarded if the evil-doer’s actions are so reckless, malicious or outrageous that they’d give a reasonable person pause. Punitive damages are those in excess of actual damages.

There are many elements involved in a breach of contract or failure to perform a contract as agreed and the damages related to that breach, so it’s important to seek advice from an experienced attorney.

The experienced counsel of L. Stephen Rizzieri, PLLC can assist you in determining whether a contract you’ve entered into has been breached, and what damages might result. Proper representation will help to ensure an appropriate way to attempt to recover those damages.

 

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2017-09-26T16:49:33+00:00 July 1st, 2017|Categories: LSR Law Firm|