Whether you realize it or not, contracts are a major part of our everyday lives. We knowingly and unknowingly enter into countless contracts on a weekly basis. Unfortunately, the contracts we agree to do not always go according to plan. Many people have a misunderstanding of how damages are legally calculated in the event a contract is breached. The following provides a basic guideline for how a North Carolina Court would calculate damages for a breach of contract:
In North Carolina, damages for a breach of contract are generally calculated based on principles of contract law. Generally, the goal of awarding damages is to compensate the non-breaching party for the losses they suffered as a result of the breach and to put them in the same position they would have been in if the contract had been fully performed. There are several types of damages that may be awarded in a breach of contract case:
- Compensatory Damages: Compensatory damages are the most common type of damages awarded in breach of contract cases. These damages are designed to compensate the non-breaching party for the financial losses they incurred due to the breach. The calculation typically involves determining the difference between the value of what was promised in the contract and what was actually received.
- Consequential Damages: Also known as special or indirect damages, consequential damages are awarded when the non-breaching party can demonstrate that they suffered additional, foreseeable losses as a result of the breach. These damages are not always easy to calculate and may require expert testimony or other evidence to establish.
- Liquidated Damages: Some contracts include a provision that specifies the amount of damages to be paid in the event of a breach. These are known as liquidated damages clauses. If the liquidated damages clause is valid and reasonable, the court will typically enforce it as the measure of damages.
- Punitive Damages: Punitive damages are not typically awarded in breach of contract cases unless the breach was also accompanied by some form of intentional wrongdoing, fraud, or malice. The primary purpose of punitive damages is to punish the breaching party rather than compensate the non-breaching party.
- Nominal Damages: In cases where the non-breaching party cannot prove substantial financial loss, the court may award nominal damages, which are token amounts (often a small sum like $1). This acknowledges that there was a breach of contract without significant financial harm.
- Restitution: In some cases, the court may order restitution, which requires the breaching party to return any benefits or payments they received under the contract.
It’s important to note that the specific calculation of damages can vary depending on the facts and circ*mstances of each case, as well as the terms of the contract itself. The non-breaching party has a duty to mitigate their damages, meaning they must take reasonable steps to minimize their losses once they become aware of the breach.
If you are involved in a breach of contract dispute in North Carolina, it’s advisable to consult with an attorney who specializes in contract law. They can provide guidance on how damages may be calculated in your specific situation and help you navigate the legal process.
