Often when we hear about the outcomes of legal proceedings in the papers, the term damages is commonly used with reference to the result. But what do damages really mean? Here, we look to define damages as well as outline what the types of damages are. Doing so can improve a person’s understanding of damages, should they ever be affected by them in a legal setting.

What are damages?

In short, a quick damages definition would be that damages are awarded when there has been a breach of contract and the award compensates the injured party. Damages are the monetary payment that a judge awards a party. Judges will do so if they find a party to have suffered losses because of the action of another. 

The party that originated those losses will be the one that is forced to pay that financial reward. A good rule of thumb is that damages are meant to put the claimant back to the position they should have been in, had a contract been performed correctly or the wrongdoing not occurred. In that way, they are often awarded for the expectation of a loss as well as losses incurred in the past.

How do damages work?

There are three types of damage that are often seen. They are compensatory, nominal and punitive. 

Within compensatory damages, there are two types again. Economic and non-economic. Economic damages are ones that can be clearly related to the breach of contract - for example, loss of earnings or other incurred expenses. Non-economic means injury that a party may have received which are difficult to put an exact amount of financial cost on. So, for example, damage to a business’s reputation. Both forms of these compensatory damages will put a price on how much you should be awarded. 

Nominal damages, in comparison, while still a form of financial reimbursement for injury caused, are smaller. They are awarded when a court finds that a claimant’s case for a breach of contract or injury is insignificant. In effect, nominal damages mean that whilst the claimant was correct, there was really no harm done in practice. 

Punitive damages are a form of punishing a defendant who has willfully breached or hurt another party. Such damages can be awarded by juries and are often used to set an example to the rest of society on how not to behave. 

Advantages of damages

The obvious advantage of damages is that a person can be financially rewarded should they be wronged in some way. That could be through a breach of contract in business, as well as suffering a personal injury from another party. Being financially rewarded may not return their lives to how it was, or how it should have been, but it can at least try to soften the blow. Plus, as is the case of punitive damages, it can act as a way to improve society’s behavior as a whole. 

Contractbook and damages

We are big believers in the law and as a result, believe that damages should be awarded if that is what the law outlines as the right course of action. Winning damages is far easier if you are a claimant (or the damaged party) that has a strong contract to prove that the other party has acted wrongly towards you. 

That’s why we think contracts are so great. 

They act as a deterrent in the first instance, encourage both parties to uphold both sides of the contract itself, and can be used to help seek damages should a breach actually occur.

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