What Is the Standard Measure of Damages for Breach of Contract

When entering into a contract, it is important to understand the potential consequences of a breach. One of the most significant consequences of a breach of contract is the measure of damages that may be awarded to the non-breaching party. In this article, we will explore the standard measure of damages for breach of contract.

First, let’s define what a breach of contract is. Simply put, a breach of contract occurs when one party fails to fulfill their obligations under the contract. This can include failing to meet deadlines, failing to deliver goods or services as promised, or failing to make payments as agreed upon.

When a breach of contract occurs, the non-breaching party has the right to seek damages. Damages are a monetary award designed to compensate the non-breaching party for the losses they suffered as a result of the breach.

The standard measure of damages for breach of contract is designed to put the non-breaching party in the position they would have been in had the breach not occurred. This means that the damages awarded should cover the actual losses suffered by the non-breaching party, but no more.

There are two primary types of damages that may be awarded for a breach of contract: compensatory damages and consequential damages.

Compensatory damages are designed to compensate the non-breaching party for any direct losses suffered as a result of the breach. This can include things like lost profits, additional expenses incurred, or costs associated with finding a new supplier or service provider.

Consequential damages, on the other hand, are designed to compensate the non-breaching party for any indirect or consequential losses suffered. This can include things like lost business opportunities, lost goodwill, or damage to reputation.

In addition to compensatory and consequential damages, there may also be other types of damages that may be awarded, such as punitive damages or liquidated damages. However, these types of damages are not typically awarded in standard breach of contract cases.

In conclusion, the standard measure of damages for breach of contract is designed to compensate the non-breaching party for their losses while keeping the award reasonable and proportionate to the actual damages suffered. If you are considering entering into a contract, it is important to understand the potential consequences of a breach and to seek legal advice if necessary to ensure that your interests are protected.

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