What Compensation Can Be Recovered Through a Breach of Contract Claim?
In breach of contract claims, several different types of remedies can be awarded — potentially including specific performance of the contract, full rescission of the agreement, and other types of injunctive relief. That being said, in most breach of contract claims, monetary compensation is the primary remedy.
This raises an important question: How much compensation is actually available through a breach of contract lawsuit? The answer: It is complicated. Though, generally contract breach compensation is tied directly to the non-breaching party’s total damages. Here, our West Palm Beach commercial litigation attorneys highlight the most important things that business owners need to know about their ability to recover compensation through a contract breach claim.
Breach of Contract Lawsuits: Compensatory Damages
As a general rule, breach of contract damages are “compensatory damages”. This means that compensation is typically not awarded in order to punish the breaching party. Instead, financial relief is awarded to account for the actual damages suffered by the business that was the victim of the breach. In breach of contract cases, the compensatory damages fit into one of the following two categories:
- General Damages: General damages covers direct losses. It could include something like a refund for non-performance or reimbursement of actual losses. General damages are the most common type of compensation awarded in these cases.
- Special Damages: In some cases, plaintiffs may also be entitled to special damages. Special damages are also called ‘consequential damages’. Essentially, they are the damages that flow out of the breach, but are not themselves direct losses. A common examples of this would be the loss of profits. As special damages are inherently more complex, it is crucial that plaintiffs who are seeking them work with a top-rated business litigation attorney,
Breach of Contract: Punitive Damages are Rare
In breach of contract claims, punitive damages are only awarded in very limited cases. Also referred to as exemplary damages, punitive damage punish misconduct by the breaching party. Generally, they will only be considered if the breaching party committed fraud or another type of especially egregious misconduct.
The Key Limitation on Damages: Non-Breaching Parties Have a Duty to Mitigate
Following a contract breach, the non-breaching party should take all reasonable efforts to prevent their business from suffering further losses. Indeed, under Florida law, non-breaching parties must take reasonable efforts to mitigate their damages. Even if you can prove that a defendant breached a contract, and you can also prove that your company suffered financial harm as a result, you will not be awarded compensation if the defendant can, in response, establish that your business violated its duty to mitigate.
Contact Our Florida Commercial Litigation Attorneys Today
At Pike & Lustig, LLP, our West Palm Beach commercial litigation attorneys have deep experience handling the full range of contract disputes. If your company suffered damages as a result of a breach of contract, please do not hesitate to reach out to our law firm for legal guidance. In addition to our main office in West Palm Beach, we also have an additional location in Miami.