How compensatory damages can work for breach of contract claims

| Mar 30, 2021 | Business Litigation |

Contracts form the backbone of many business dealings in Ohio, but there are times when one party or the other does not fulfill their end of the agreement. When this happens, the injured party may pursue a breach of contract claim. One type of damages they may seek in such a claim are compensatory damages. There are two types of compensatory damages that may be sought: general damages and special damages.

General damages

General damages compensate the nonbreaching party for direct and necessary losses incurred by the breach. This may be in the form of a refund for prepaid goods, reimbursement for costs incurred in sending or payment for an increase in costs incurred in obtaining what they bargained for.

Special damages

Special damages compensate the non-breaching party for losses sustained due to the breach that, due to special circumstances, the non-breaching party would have predicted them. That is, the losses are those caused by the breach, but not in a manner that is direct and immediate. In order to be awarded special damages, the non-breaching party has the burden of showing that the breaching party knew of these circumstances when they entered into the contract.

Learn more about breach of contract claims

Compensatory damages, either general damages or special damages, are not the only type of damages a person can seek in a breach of contract claim; there are others. For those facing questions about a possible breach of contract and how to address it, working with an attorney experienced in business litigation can be a great first step towards resolving the issue.