Contracts are there to protect both parties involved in a transaction. When one party is harmed because of the other's actions, they may claim that there has been a breach of contract and seek payment to make up for their losses.
In that case, the payment of damages may be necessary. If damages are paid, they may come in a few forms.
What are some kinds of damages that might be paid in a contract dispute?
Some of the kinds of damages you may receive include:
- Nominal damages
- Liquidated damages
- Punitive damages
- Compensatory damages
Each kind is meant to compensate you in a different way. For example, liquidated damages are a reasonable estimate of the actual damages that might happen if a contract is breached and are usually included in the original contract. Nominal damages are token damage awards. Compensatory damages make up the nonbreaching party's losses, and punitive damages are paid beyond the actual damages. They're paid as a form of punishment, forcing the wrongful party to pay out for wrongful acts. These are unusual in business contracts, but they are possible.
What should you do if you believe your contract has been breached?
If you believe that your contract has been breached and you have suffered financial losses as a result, it's a good choice to reach out to your attorney to discuss your options. Your contract may describe specific routes for disputes, like going through arbitration, or you may want to consider going to trial if the other party will not negotiate or pay out for your losses.