Webb & Webb P.C. | Caring. Committed. Professionals.
Webb & Webb P.C. | Caring. Committed. Professionals.

Contact Your Legal Partners Today

Advance Your Business With
Experienced Advocacy 

What are compensatory damages

On Behalf of | Jun 9, 2022 | Contract Law

Contract law underlies most business activity in Texas and across the country. Once they have made an agreement, businesses rely on their partners and customers to follow through with everything they promised. When someone fails to live up to the terms of the contract, it can wreak havoc on a business. The business can then pursue a legal claim of breach of contract to seek compensation for their damages.

New business owners may wonder what to request for damages when another business breaches a contract. Conversely, they should consider how to defend against such a claim.

Differences between general and special damages

Two types of actual damages in contract-dispute cases compensate a plaintiff by covering expenses in an amount sufficient to cover, or make good, on the loss caused by the breach.  General damages compensate for losses directly related to the breach and include expenses that would put the plaintiff in the same position had the defendant fulfilled the terms of the contract. Though often a reasonably straightforward calculation, these can include more speculative costs.

The second type, special damages, accounts for losses attributable, but not directly related, to the defendant’s breach. For example, the defendant knew the plaintiff could display the products to consumers only between certain dates. A plaintiff must prove that the defendant knew the special circumstances at the time of contract formation.

Business experience in Texas

Over 50% of new businesses in Texas have an expected lifespan of at least five years. Breach of a single contract term, however, can either kill prospects for growth or revive an ailing business from a financial pitfall and loss of goodwill. An attorney with experience in business law and contract disputes can help you understand your options.