Breach of Contract: Monetary Damages
The importance of a well-drafted contract cannot be understated, as they will often contain provisions regarding the rights of the parties if there is a breach. There are a number of ways the wronged party may be compensated, with the form most people first think of being monetary damages.
There are two main types of damages: specific performance, where the party breaking the contract is forced to complete the job, and monetary damages, which we will focus on here.
Monetary damages aim to compensate the innocent party for what they would have gained if the contract was fulfilled. This article will discuss three types: expectation damages, restitution damages, and reliance damages.
What is a Breach of Contract?
Breach of contract refers to a situation in which one party to a legally binding agreement fails to fulfill their obligations as outlined in the contract. It occurs when there is a violation of the terms, conditions, promises, or representations specified in the contract without a valid legal reason. In other words, it is the failure to perform the duties or obligations that were agreed upon in the contract.
What Are Damages?
In Canadian law, damages are typically associated with the monetary compensation awarded to a party who has suffered harm or loss as a result of the wrongful actions or negligence of another party. Damages are intended to provide financial relief to the injured party and to place them in the position they would have been in if the wrongful action or negligence had not occurred.
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However, there are situations where damages can take forms other than pure monetary compensation.
Expectation Damages
Expectation damages are determined from the perspective of the innocent party and are determined based on the value that the innocent party would have received if the contract had been performed as expected. They are what the innocent party expected from the contract.
Example 1
Company A agreed to deliver a shipment of sugar for Company B to resell on a certain day, but Company A was ten days late delivering the shipment. During those ten days, the price of sugar fell considerably, resulting in $5,000 of lost profit for Company B. Company B might be able to claim damages in the amount of $5,000 for the lost profits. They expected to earn base on their contract with Company A.
Example 2
Company C agree to provide Company D with a piece of equipment that they need to replace to run their business. At the time of signing the contract, Company D let Company C know that if they didn’t get that piece of equipment, they would lose out on their regular business income. Knowing that this was a possibility, Company C still did not deliver the equipment on time. Company D could potentially claim damages for the days where they lost out on revenue since Company C was aware that that would be a consequence.
You might be able to claim expectation damages if, since the other party has breach the contract, you have been losing out on something that you expect to receive. If you believe that you have a claim for expectation damages, be sure to contact a contract lawyer at Achkar Law for more information.
Restitution Damages
Restitution damages are used less often but are still an option available to claim. They focus on the party guilty of breaking the contract and preventing them from gaining an advantage through their breach. Usually, restitution damages are used when the innocent party would be entitled to the value of what was promised in the contract.
Example 1
Company E agreed to perform a landscaping service for Company F, but after they finished, Company F refused to pay them. Company F has gotten that service unjustly. Company E might be able to claim restitution damages for the payment that they should have received. And remove the advantage that Company F received by breaching their contract.
Example 2
Company G delivered a set of goods at an agreed upon time for Company H. Despite receiving the goods, Company H refused to pay the agreed upon amount. Company G might be able to claim restitution damages for the cost of the goods.
You may be able to claim restitution damages if, since the other party has breached the contract. They have benefited from a service unjustly. If you believe that you have a claim for restitution damages. Be sure to contact a qualified lawyer at Achkar Law for more information.
Reliance Damages
Reliance damages are meant to put the innocent party in the position that they would have been before the contract was entered into, particularly in situations where the innocent party change their position for a contract that was not performed.
Example 1
Company I agreed to perform a landscaping service for Company J, and to prepare for that service, they bought new, specialized equipment that they did not need for other jobs. At the last minute, Company J cancelled the service and refused to pay Company I. Company I had changed its position by spending money to perform the contract. They might be able to claim reliance damages for the cost of their new equipment.
Example 2
Company K agree to hire Company L to help them prepare for a fundraising event, which they could not go through without Company L’s help. At the last minute, Company L refuse to show up, and Company K had to cancel the event. Since Company K does not know how much money they would have raise at the event. They would have trouble claiming expect damages in that amount. Instead, they might be able to claim reliance damages for the amount that they spent preparing for the event.
You might be able to claim reliance damages if. On the assumption of the other party upholding their end of the contract. You spent money which has gone to waste since the other party breach. If you believe that you have a claim for restitution damages. Be sure to contact a qualify lawyer at Achkar Law for more information.
Conclusion
As unfortunate as they can be, breach of contract are a common occurrence. If you are facing a breach of contract. Make sure to look into the options for damages and speak to a lawyer. While as soon as possible to receive the best advice on how to move forward. Our experience team at Achkar Law will be able to guide you to the best solution for your particular situation.
Further Reading
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If you are facing a breach of contract, the team at Achkar Law can help.
Contact us by phone toll-free at 1 (800) 771-7882 or email us at [email protected] and we will be happy to assist.
