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Damages in breach of contract lawsuits

On Behalf of | Feb 10, 2021 | Business Litigation, Contract Disputes

Everyone doing business in New York understands the importance of contracts. This crucial document outlines the rights and responsibilities of each party in a business relationship. When one side doesn’t live up to his or her end of the agreement, that can cause big problems for the people with whom he or she is working. If someone breaches a contract, one of the most common remedies is a lawsuit. A civil court may award the injured party damages.

Understanding damages

In general, the function of damages is to make the injured party whole. You can pursue different types of damages in court. One of the most common is compensatory damages. These are meant to restore the plaintiff to the position in which he or she would have been had the contract been honored.

Liquidated damages are different. These are outlined in the contract and usually include an estimate of damages to one party if the contract isn’t fulfilled. Nominal damages are token amounts. Courts award them if there’s no provable financial damage to the plaintiff. These are small amounts of money.

The last kind of damages you can pursue in a breach of contract case is known as punitive damages. These have no relationship to the amount of money lost. It’s rare to see them in cases involving contract disputes. Punitive damages serve as punishment. They’re only awarded when something egregious has happened.

When writing contracts, it’s important to be very specific. If something must be delivered exactly on time, for example, that should be clear. Otherwise, the court may not think that damages are warranted in a case in which the delivery was just a day late. Anyone who owns a business should seek advice from a lawyer if he or she believes a breach of contracthas occurred.