6.Types of damages

Depending on the nature of the breach, you may have several different remedies available to you. The remedies may be subject to reduction or modification if the injured party has also breached the contract. Damages are monetary awards, and they include:

• Compensatory Damages: These are damages for a monetary amount that is intended to compensate the non-breaching party for losses due to the breach. The aim is to “make the injured party whole again”. There are two types of compensatory damages:

  •  Expectation Damages: Damages intended to cover what the injured party expected to receive from the contract. Calculations are usually straightforward as they are based on the contract itself or market values.         

  • Consequential Damages: These are intended to reimburse the aggrieved party for indirect damages besides the contractual loss; for example, loss of business profits due to an undelivered machine. They must “flow from the breach”, and be reasonably foreseeable upon entering into the contract.       

• Liquidation Damages: Damages that are specifically provided for in the contract. These are available when damages may be hard to foresee and must be a fair estimate of what damages might be in case of breach. Determined during contract formation.  

• Punitive Damages: Intended to punish the breaching actors and to deter them from committing future breaches. Fairly rare in contract cases, though they may be available in certain fraud and tort causes of action that overlap with contract law.

• Nominal Damages: These are damages which are awarded when the injured plaintiff does not actually incur a monetary loss. Also rare in contract cases because breaches of contract typically involve some sort of loss to one party. May be available in tort crossover claims.  

Restitutionary Damages: These are not really legal damages per se, but rather are an equitable remedy to prevent the breaching party from being unjustly enriched. For example, if one party has delivered goods but the other party failed to pay, they may be entitled to restitutionary damages to prevent the unjust enrichment.

8.Third-party beneficiary contracts

A contract operates to confer rights and impose duties only on the parties to the contract and no other parties. However, in many jurisdictions, there are two exceptions to this general rule: The first is when the original contract provides for rights to be conferred on a third party; And the second is when contractual right and duties transferred to a third party at a later date. The first type is called a third-party beneficiary contract when contract mades for the benefit of a third-party beneficiary.  The most common form of this type of contract is where party A enters into a valid contract with party B which stipulates that party B shall render performance for the benefit of party C. Un this situation party A is called the promisee, party B - promisor. If the promisor fails to perform, the promisee must prove to the court that the third party are an intended beneficiary.