How to assess damages after a breach of contract

| Jul 28, 2020 | Business Disputes |

When a business provides yours with goods or services, any contract you create will include terms about deliverables. Most businesses will satisfy these. But some may fail to deliver on the goods or services – at the price agreed upon – in your contract. In these cases, it’s important to understand how you can assess the damages the business’ breach of contract caused.

Calculating damages

Calculating the damages caused by a breach of contract depends on the breach that occurred, as well as its impact. If the business failed to deliver goods or services, you will determine your loss based on the standard measure of damages. This method accounts for the value of any substitute goods or services you purchased. The cost incurred would equal the damages you pursue against the business. The breach, though, may have stemmed from issues of pricing or overbilling. In these cases, you will want to calculate the difference between the price in your contract and the market value of the goods or services paid for.

Types of damages

Compensatory damages are the most common award in a breach of contract case. Two different sub-types of these exist. Of these, you will most likely receive an award for expectation damages, which compensate the actual value of the loss the breach caused. Less often awarded are consequential damages, which compensate the indirect value of the loss the breach caused. If the other business’ actions qualify as deliberate misconduct, it could face punitive damages as well. In this case, it would have to pay a fine set by a judge. The court may also mandate specific performance, in which the breaching business would provide yours with the promised goods or services. And you have the option, too, of cancelling your contract and pursuing restitution against the business. Doing so would restore your business to the position it was in before the contract’s creation.

If another business has breached the terms of your contract, you do not need to right matters alone. An attorney with business law experience can help you understand and work toward the relief you’re entitled to.