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What damages do courts provide for breach of contract

On Behalf of | Jun 9, 2022 | Contract Disputes

As online commerce has increased, the transportation sector has adapted to the transition. Most recently, the stress on the global supply chain has interrupted deliveries and services to almost every business. On occasions when sellers and buyers fail to deliver on a promise, the other parties will want to know how to calculate their losses and obtain a remedy without long-term financial impact.

Types of damages available

Generally, a court awards two types of compensatory (actual) damages when one party breaches its duties under a contract. General damages recover the costs directly associated with the losses suffered. These may include a refund to the buyer of money spent in the event the seller delivered the wrong product or failed to deliver it timely.

Less easy to calculate, special damages reimburse parties for losses related indirectly to the breach. For example, a buyer may obtain special damages if evidence proved the seller had knowledge that a sale on the item lasted only during a specific span of time.

Calculation method

Calculation methods for recovering damages can vary depending upon the type of contract, or whether the contract was for services or goods. The general principle remains the same, however: The amount returned equals that which would return the nonbreaching party to the same position it would have been in had the contract been performed.

Understanding business contracts

The outlook for the supply chain will continue to fluctuate. Businesses with contracts concerning product delivery could feel the impact most directly. A conversation with an attorney who understands how contract language can affect a bottom line can help.