This submission will discuss what damages are in law and the types of remedies available with reference to case law, the essay will further on discus restrictions imposed by equity on specific enforcement of contractual obligations, furthermore, give reasons to support the contentions that specific performance is a discretionary remedy.
According to the West’s Encyclopedia of American Law damages are defined as the amount of money which a plaintiff (the person suing) may be awarded in a lawsuit. It is the monetary compensation that is awarded by a court in a civil action to an individual who has been injured through the wrongful conduct of another party.
Damages attempt to measure in financial terms the extent of harm a plaintiff has suffered because of a defendant’s actions. Damages are distinguishable from costs, which are the expenses incurred as a result of bringing a lawsuit and which the court may order the losing party to pay. Damages also differ from the verdict, which is the final decision issued by a jury.
Damages are generally measured in terms of lost expectation. In a contractual situation, the expectation would normally be based upon lost earnings, in addition to costs suffered as a result of a breach. In Marks v GIO Australia Holdings Limited Gaudron J stated that:
‘Damages are payable for the loss involved in non-performance of the contract. Even if a contract is not susceptible of specific performance, the other party is legally entitled to expect its performance. Hence the expression ‘expectation loss’! There are other bases that exist for the measure of damages”.
Smith, Hogg ; Co v Black Sea Insurance a ship owner was held liable to a charterer in damages for loss of a cargo which had been caused by a combination of perils of the sea and the unseaworthiness of the ship. The latter was sufficient to carry a claim for damages. The purpose of damages is to restore an injured party to the position the party was in before being harmed. As a result, damages are generally regarded as remedial rather than preventive or punitive. However, Punitive Damages may be awarded for particular types of wrongful conduct. Before an individual can recover damages, the injury suffered must be one recognized by law as warranting redress, and must have actually been sustained by the individual.
The law recognizes three major categories of damages: Compensatory Damages, which are intended to restore what a plaintiff has lost as a result of a defendant’s wrongful conduct; nominal damages, which consist of a small sum awarded to a plaintiff who has suffered no substantial loss or injury but has nevertheless experienced an invasion of rights; and punitive damages, which are awarded not to compensate a plaintiff for injury suffered but to penalize a defendant for particularly egregious, wrongful conduct. In specific situations, two other forms of damages may be awarded: treble and liquidated.
There are two general categories of damages that may be awarded if a breach of contract claim is proved. They are: Compensatory Damages. Compensatory damages (also called “actual damages”) which cover the loss the non-breaching party incurred as a result of the breach of contract. The amount awarded is intended to replace, or make good for loss caused by the breach.
The two kinds of compensatory damages that the non-breaching party may be entitled to recover are:
General Damages. These damages cover the loss directly and necessarily incurred by the breach of contract. General damages are the most common type of damages awarded for breaches of contract.
Example: Company A delivered the wrong kind of furniture to Company B. After discovering the mistake later in the day, Company B insisted that Company a pick up the wrong furniture and deliver the right furniture. Company A refused to pick up the furniture and said that it could not supply the right furniture because it was not in stock. Company B successfully sued for breach of contract. The general damages for this breach could include:
• refund of any amount Company B had prepaid for the furniture; plus
• reimbursement of any expense Company B incurred in sending the furniture back to Company A; plus
• payment for any increase in the cost Company B incurred in buying the right furniture, or its nearest equivalent, from another seller.
Special Damages. Special damages (also known as “consequential damages”) cover any loss incurred by the breach of contract because of special conditions or circumstances that are not ordinarily predictable. These are actual losses caused by the breach, but not in an immediate or direct way. To obtain damages for this type of loss, the non-breaching party must prove that the breaching party knew of the special circumstances or requirements at the time the contract was made.
Example: In the scenario above, if Company A knew that Company B needed the new furniture on a particular day because its old furniture was going to be carted away the night before, the damages for breach of contract could include all of the damages awarded in the scenario above, plus
• payment for Company B’s expense in renting furniture until the right furniture arrived.
To further my discussion with respect to compensatory damages, a defendant is liable to a plaintiff for all the natural and direct consequences of the defendant’s wrongful act. Remote consequences of a defendant’s act or omission cannot form the basis for an award of compensatory damages .
Consequential damages, a type of compensatory damages, may be awarded when the loss suffered by a plaintiff is not caused directly or immediately by the wrongful conduct of a defendant, but results from the defendant’s action instead. For example, if a defendant carried a ladder and negligently walked into a plaintiff who was a professional model, injuring the plaintiff’s face, the plaintiff could recover consequential damages for the loss of income resulting from the injury. These consequential damages are based on the resulting harm to the plaintiff’s career. They are not based on the injury itself, which was the direct result of the defendant’s conduct.
The measure of compensatory damages must be real and tangible, although it can be difficult to fix the amount with certainty, especially in cases involving claims such as pain and suffering or emotional distress. In assessing the amount of compensatory damages to be awarded, a trier of fact (the jury or, if no jury exists, the judge) must exercise good judgment and common sense, based on general experience and knowledge of economics and social affairs. Within these broad guidelines, the jury or judge has wide discretion to award damages in whatever amount is deemed appropriate, so long as the amount is supported by the evidence in the case.
A plaintiff can recover damages for a number of different injuries suffered as a result of another person’s wrongful conduct. The plaintiff can recover for a physical impairment if it results directly from a harm caused by the defendant. The jury, in determining damages, considers the present as well as long-range effects of the disease or injury on the physical well-being of the plaintiff, who must demonstrate the disability with reasonable certainty. Compensatory damages can be awarded for mental impairment, such as a loss of memory or a reduction in intellectual capacity suffered as a result of a defendant’s wrongful conduct.
A plaintiff may recover compensatory damages for both present and future physical pain and suffering. Compensation for future pain is permitted when there is a reasonable likelihood that the plaintiff will experience it; the plaintiff is not permitted to recover for future pain and suffering that is speculative. The jury has broad discretion to award damages for pain and suffering, and its judgment will be overturned only if it appears that the jury abused its discretion in reaching the decision.
Mental pain and suffering can be considered in assessing compensatory damages. Mental pain and suffering includes fright, nervousness, grief, emotional trauma, anxiety, humiliation, and indignity. Historically, a plaintiff could not recover damages for mental pain and suffering without an accompanying physical injury. Today, most jurisdictions have modified this rule, allowing recovery for mental anguish alone where the act precipitating the anguish was willful or intentional, or done with extreme care-less-ness or recklessness. Ordinarily, mental distress brought on by sympathy for the injury of another will not warrant an award of damages, although some jurisdictions may allow recovery if the injury was caused by the willful or malicious conduct of the defendant. For instance, if an individual wrongfully and intentionally injures a child in the presence of the child’s mother, and the mother suffers psychological trauma as a result, the defendant can be liable for the mother’s mental suffering. In some jurisdictions, a bystander can recover damages for mental distress caused by observing an event in which another person negligently, but not intentionally, causes harm to a family member.
Compensatory damages of an economic nature may also be recovered by an injured party. A plaintiff may recover for loss of earnings resulting from an injury . The measure of lost earnings is the amount of money that the plaintiff might reasonably have earned by working in her or his profession during the time the plaintiff was incapacitated because of the injury. In the case of a permanent disability, this amount can be determined by calculating the earnings that the injured party actually lost and multiplying that figure out to the age of retirement—with adjustments. If the amount of earnings actually lost cannot be determined with certainty, as in the case of a salesperson paid by commission, the plaintiff’s average earnings or general qualities and qualifications for the occupation in which she or he has been employed are considered. Evidence of past earnings can also be used to determine loss of future earnings. As a general rule, lost earnings that are speculative are not recoverable, although each case must be examined individually to determine whether damages can be established with reasonable certainty. For example, a plaintiff who bought a restaurant immediately before suffering an injury could not recover damages for the profits he might have made running it, because such profits would be speculative. A plaintiff who is unable to accept a promotion to another job because of an injury would stand a better chance of recovering damages for loss of earnings, because the amount lost could be established with more certainty.
Individuals injured by the wrongful conduct of another may also recover damages for impairment of earning capacity, so long as that impairment is a direct and foreseeable consequence of a disabling injury of a permanent or lingering nature. The amount of damages is determined by calculating the difference between the amounts of money the injured person had the capacity to earn prior to the injury and the amount he or she is capable of earning after the injury, in view of his or her life expectancy.
Loss of profit is another element of compensatory damages, allowing an individual to recover if such a loss can be established with sufficient certainty and is a direct and probable result of the defendant’s wrongful actions. Expected profits that are uncertain or contingent upon fluctuating conditions would not be recoverable, nor would they be awarded if no evidence existed from which they could be reasonably determined