The purpose of an award of damages for breach of contract is to compensate the Claimant for loss rather than to punish the Defendant. In the case of Robinson v Harman (1848), Baron Parke said that the purpose of damages for breach of contract is to place the Claimant in the same position as if the contract had been performed.
Damages for monetary loss
Damages awarded for breach of contract normally takes this form, meaning that you are compensated for the financial loss you have suffered as a result of the breach. This may include a monetary award to compensate for costs, loss of profits or satisfaction of any liability that you have suffered in relation to a third party.
Damages for non-financial loss
There may be circumstances when you experience mental distress and/or loss of amenity as a result of a breach of contract. Damages for non-financial loss is typically difficult to recover but there are certain narrow exceptions to the normal rule which we are happy to discuss with you should you have experienced a breach of contract and suffered non-financial loss.
Sale of goods
You may have been subject to a breach of contract in relation to the sale of goods.
If you have purchased goods and they have arrived in a defective state you may be entitled to damages. There are different ways of calculating damages for defective goods; one such calculation is the difference between the value of the goods at the time of delivery and the value had the goods been delivered in a non-defective state.
You may also be entitled to damages for non-acceptance of goods if you have supplied goods and the buyer has failed to accept the goods or pay for the goods. Again there are different ways of calculating damages for non-acceptance of goods but one example is to calculate the difference in the contract price and the current market price at the time the goods should have been accepted or paid for.
If you have purchased goods and they have failed to arrive you may be entitled to damages for non-delivery of goods. As above, there are different ways of calculating damages of this type but one example is to calculate the difference between the contract price and the current market price at the time the goods should have been delivered.
Although the general purpose of damages is to compensate the Claimant for loss rather than to punish the Defendant, there are some limited exceptions.
If the wrongdoer has benefited from a breach of contract and the Claimant has not necessarily suffered a loss, it may be possible to seek restitutionary damages which is measured by the benefits gained by the wrongdoer.
Nominal damages may also be awarded in limited circumstances and this is essentially a small sum of money awarded to a Claimant who has suffered no recoverable loss.
There are a few other limited exceptions to the general rule which we are happy to discuss with you should you wish.
If you wish to discuss this article further, please contact any member of our Dispute Management team at Lupton Fawcett.
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