Creating contracts that clearly outline expectations for both parties is a vital part of a company’s success, but sometimes a breach of contract will happen despite your best efforts. Taking legal action helps compensate your business for the resulting losses.
In contract law, the damages awarded are designed to restore the injured party to the position they would have been if the breaching party had fully performed the contract. In California, the general measure of damages for breach of contract is codified in CA Civil Code section 3300: “For the breach of an obligation arising from contract, the measure of damages, except where otherwise expressly provided by this code, is the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom.”
Damages Awarded in Breach of Contract Cases
Types of damages your business may be awarded in a breach of contract case include:
- Compensatory damages. These damages pay for actual losses a business has suffered due to breach of contract. General compensatory damages pay for losses incurred directly. Special compensatory damages, also called consequential damages, pay for losses due to special or unpredictable circumstances associated with the breach of contract.
- Liquidated damages. This is a type of damages previously agreed upon by both parties in the event that one party committed a breach of contract. However, courts may not always enforce this contract provision if they believe the damages would be overly punitive.
- Specific performance. Sometimes, money is not sufficient to restore the injured party to the position they would have been in if the terms of the contract had been fulfilled. In this case, specific performance damages can force the breaching party to fulfill the contract. Specific performance damages are most often associated with real estate since each piece of property is unique.
- Punitive damages. Only awarded in cases of willful or egregious misconduct, punitive damages are intended as punishment for the party that breached the contract.
Contact Us Today
Breach of contract can have serious ramifications for your business. For help protecting the rights of your company, contact Stone LLP today. Our skilled business law attorneys can assist in cases involving both total and partial breach of contract.