A Forward-Thinking Firm

Compensatory damages in a breach of contract claim

| May 7, 2021 | Contracts |

Contracts form the backbone of many business dealings in Ormond Beach. However, when one party does not hold up to their end of the bargain, the injured party may pursue a breach of contract claim. Remedies can take the form of specific performance, rescission, punitive damages and compensatory damages. Compensatory damages, also referred to as “actual damages” are meant to cover the loss the injured party suffered due to the breach. There are two types of compensatory damages: general damages and special damages.

General damages

General damages are meant to cover losses incurred both directly and necessarily due to the breach. These are the most common type of damages in breach of contract claims. For example, general damages can cover amounts prepaid under the terms of the contract, reimbursement for sending back goods and reimbursement for increased costs incurred in purchasing what was contracted upon from another seller.

Special damages

Special damages are also known as “consequential damages.” These cover losses incurred due to ordinarily unpredictable circumstances or conditions caused by the breach. One can only be awarded special damages if they are able to prove that the breaching party knew of these ordinarily unpredictable circumstances or conditions at the time the contract was entered into.

Learn more about contract law

If you have suffered losses due to a breach of contract, it is important that you understand all of your rights and options for compensation. This post is for educational purposes only and does not contain legal advice. Our firm’s webpage on contract law may be a good starting point for those who want further information on this topic.