The prerequisite to recovery of consequential damages is to provide sufficient evidence as to lost profits, and in business cases, an insufficient history of profits will bar consequential damages. ) Generally, anticipated lost profits can only be recovered if the plaintiff provides facts to support with reasonable certainty that he or she would have earned a profit but for the defendant’s failure to perform. )Ĭalculating the sum of damages in a breach-of-contract claim often involves determining the value of profits, which the law provides cannot be “speculative, remote, imaginary, or contingent,” as such measures cannot adequately serve as a legal method for recovery due to their inherent uncertainty. If the facts of the case indicate that a specific purpose was intended to be accomplished and known by one of the parties, and a failure to fulfill this purpose would result in greater damage than would directly flow from the contractual breach, these damages are likely within the “contemplation of the parties.” (See Mack v. Baxendale, which emphasized the principle that damages will be recoverable for a breach of contract if it were foreseeable at the time of the formation of the contract that these damages would occur as a result of the breach. )įor consequential damages to be awarded, they must fall within a framework outlined in the dissent to the influential English contract case of Hadley v. Wong (2010) 190 Cal.App.4th 739, 754.) These damages measure the injured party’s loss that occurs following the breach, rather than as a direct result of the breach itself. )Ĭonsequential damages, also known as special damages, are dissimilar to general damages in that they do not flow directly from a contractual breach, but are secondary losses arising from particular circumstances of the case that are specific to either the contract or to the parties. Cotter (2016) 2 Cal.App.5th 984, 1010 see Lewis Jorge Construction Management, Inc. (2012) 96 A.D.3d 1327, 948 N.Y.S.2d 147, 151-152.) Since general damages are a direct consequence to a contractual breach, parties are generally aware at the time the contract is formed that were a breach to occur, these damages would be the predictable outcome of that breach. General damages, also referred to as direct damages, are intended to place the non-breaching party in a similar position to that which they would occupy had the breaching party fulfilled their contractual obligation. The two primary types of contractual damages are general damages, which compensate for the value of the promised performance, and consequential damages, which account for losses incurred as a result of the breach. In the law of contracts, after a breach has occurred, an injured party is allowed to receive compensation for the substantial harm he or she endured as a result of the breaching party’s failure to perform. As such, knowing the measure of damages realistically available in various non-personal injury actions is key to discerning which of those actions are worth pursuing and to what extent of investment.īreach of contract is perhaps the most common claim underpinning business disputes. A victory without an adequate remedy is hardly a victory at all. The two questions a litigator must ask before taking on any new matter are (1) whether they can win, and (2) what they can get for winning.
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