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Damages for Breach of Contract

The first thing to know about damages is that if the other party has breached, you have a duty to mitigate damages. Even if the other party has breached, you cannot delay in taking reasonable steps to avoid impending damages.

You will be entitled to an amount necessary to place you in the economic position you would have been in had the contract not been breached. In general, calculate damages by calculating the amount of money or value you would have received had the contract not been breached; add incidental damages; add consequential damages, if any; subtract any money you saved since you did not have to complete the contract. As you can see, often the damages for a breach are little or none.

Since consequential damages must be foreseeable at the time of the contract, it is generally a good idea to make the other party aware as soon as possible the extent and types of damages you will incur if he continues with the breach.

You cannot recover damages that are speculative or based on guesswork or conjecture. In many instances, this rule precludes the recovery of many elements of damage. This rule often limits recovery in lost profits sought by a new business since such profits are considered merely speculative. If the business is an ongoing business with a history of profits, damages may well include loss profits suffered through collateral contracts or from collateral sources if otherwise foreseeable and proved with certainty.

You may have the right to specific performance of the contract if the goods or services are "unique." This would include heirlooms, priceless works of art, output and requirements contracts, situations where the goods cannot be "covered" or replaced.

Some contracts contain a liquidated damage provision specifying the amount of damages or types of damages if the contract is breach.

Under certain circumstances a breach of contract may also give rise to a tort cause of action and damages as well. For example, if the other party is to process your loan application and negligently fails to do so.

Where the matter is substantial, the advice of an attorney can help you.