A valid contract is a legally enforceable agreement between two parties. The primary goal of a contract is to advise contracting parties by laying out the terms and conditions of their previously made promises. It is also to ensure that they are on track to fulfill them. Once the parties sign the final draught, the contract’s terms and conditions become legally enforceable. One of the terms violates the entire contract, then it is a breach of contract. In this article, the author has included these breaches so that it shall become easier for readers to understand the normal breaches. And also the types of damages for breach of contract.
Types of damages for breach of contract shall consist of the following content:
Compensatory type of damages for breach of contract
Liquidation type of damages for breach of contract
There are various ways in which a contract breach takes place. The author has included these breaches so that it shall become easier for readers to understand the normal breaches. And also the types of damages for breach of contract. The following are some examples of common contract violation actions:
Anticipatory breach
An anticipatory breach occurs when a breaching party advises a non-breaching party, either tacitly or explicitly, that they will not be performing the contract or meeting their legal obligations under the contract’s provisions. If this occurs, the non-breaching party may initiate a breach of contract action against them.
Minor or Partial breach
A party performs a significant portion of the contract but fails to meet a minor condition. This is a minor breach. A minor breach, unlike a material or comprehensive breach, has no significant impact on the contract’s terms.
Material or Total breach
A material or total breach occurs when a violation is so serious that it not only makes contract performance impossible but also gives the non-breaching party grounds to sue.
Assume buyer signs a contract with a seller to buy their home, fills out all of the necessary paperwork, and pay the seller in full. The buyer can sue the seller for a serious breach of contract if the seller refuses to sell their home or refuses to hand over the deed or keys to the buyer.
A contract when fraudulent, illegal, contains unconscionable subject matter, is rupturable. The parties might also stipulate which circumstances will result in a breach of contract proceeding.
In cases of a lease agreement, government contract, sales contract, the situation differs.
The other types of damages for breach of contract are:
Compensatory type of damages for breach of contract
Compensatory damages are monetary damages. The party who breaches the contract shall be liable to compensate the non-breaching party. The main intention is to penalize the breaching party and make them whole again.
For example, if a contract was made in which Party A agreed to pay Party B Rs. 5,000 for consulting services. But Party A did not use the services and did not pay. Then Party B would be entitled to Rs. 5,000 in compensation. Party A, on the other hand, would be entitled to Rs. 1,000 if Party B breached the contract and forced Party A to seek a new consultant for Rs. 6,000, which is the difference in the contract fee.
Liquidation type of damages for breach of contract
Damages for liquidation are those that are specified in the contract. They are present in contracts where the damages are difficult to predict. In the event of a violation, it also includes an estimate of damages. As a result, during the contract negotiation, both parties agree on such damages.
For example, Party A hires Party B to construct a new building. And they require by a specific date, they could insert a clause in the contract. That is, by making Party B pay Rs. 1,000 per day for each day the construction takes longer to complete.
Punitive damages
Punitive damages are monetary damages. The plaintiff receives these monetary damages in contract law. This is done to punish the defendant and discourage him from repeating the same behavior in the future. Punitive damages are also known as exemplary damages. They are a sort of monetary judgment made to the plaintiff. Additional damages could include compensating damages for the plaintiff’s losses.
Punitive damages are usually granted in addition to compensatory or other types of damages. This again results in a large increase in the plaintiff’s reward. However, there are some regulations in place for such damages.
Nominal damages
These are damages that result from the normal, natural, and likely course of events in a contract breach. For example, if Party A agreed to sell Party B cereals for Rs. 20 per bag with payment due at the time of delivery, but the market price climbed to Rs. 25 per bag by the time of delivery, and Party B refused to sell for less than Rs. 25 per bag, as a result, Party A can sue for Rs. 5 per bag in damages.
General damages
When the injured party has not suffered a monetary loss but the judge wants to show that the injured party is correct, nominal damages are awarded. Nominal damages are usually insignificant in value and are more symbolic.
Equitable remedies
Money damages may be deemed insufficient to compensate the aggrieved person in several instances. Equitable remedies may be provided in this situation. Equitable remedies entail a court ordering one or more parties to act or refrain from acting in a specific way.
- Specific performance: This may include, but is not limited to, requiring the breaching party to fulfill their contractual obligations.
- Contract rescission: The previous contract is annulled, and a new one is drawn up in its place.
- Contract reformation: The original contract is modified in this way to reflect the parties’ genuine intentions