How Damages Are Calculated for Breach of Contract in Maryland

When a contract is breached, it typically means that someone didn’t get what they were entitled to.  Those parties affected by the breach can often sue to get what they should have received under the terms of their agreement.  The damages in the case vary depending on the specific terms of the contract.  If you were involved in a contract that was breached, talk to a lawyer about what the damages might be in your case and how to collect or avoid these damages.  The Baltimore breach of contract lawyers at the Heyman Law Firm represent businesses and individuals involved in contract disputes and business litigation.  Call our law offices for help with your contract case.

Types of Damages in Breach of Contract Cases

Contract cases often have many options for remedies.  One of the most popular remedies is monetary damages paid to attempt to make the victim “whole” again.  These damages commonly cover a few specific areas of concern and result in different “types” of damages.

Compensatory Damages

Many damages come from the harm that the breach did to the party.  This can include money that you lost paying towards a project that doesn’t pan out or a purchase that the other party fails to deliver on.  These damages compensate you for those losses, working to restore you back to where you were, financially, before the contract.  Compensatory damages are calculated by looking at the expenses and payments made under the contract.  These damages can cover a wide range of harms which might be different from case to case.

One of the biggest areas of compensatory damages are costs related to the value of replacing the contract.  For instance, a contract for goods or services will have a certain price.  If the party refuses to provide the goods or services, you will need to go to another provider, which might be more expensive.  The damages in that case would typically include the difference between what you were supposed to pay under the contract and what you ended up actually paying someone else.  These kinds of damages are common in sales, contracting, and building agreements.

Consequential Damages

Sometimes a breach of contract causes further harm than just the payments you’ve already lost.  These damages are a consequence of the breach and are aptly named consequential damages (a.k.a. “special damages”).  These damages are often more complex to calculate, since doing so involves some prediction and projection.  These damages typically cover lost business and benefits related to the contract.  For instance, if a real estate transaction falls through and a new company has to delay its launch until it can find another office, it will face lost profits, missed opportunities, and additional costs to delay the launch.  Projecting and calculating these damages may require the help of a financial expert.

Liquidated Damages

Liquidated damage are damages that are included in the contract and defined from the outset.  Liquidated damages are typically set at a value that would fairly compensate the party, but this is not always the case.  In many contract cases, the court will stand by the terms the parties agreed to and enforce the liquidated damages listed in the contract.  In cases where those damages seem absolutely unfair, a court may change the damages or ignore the liquidated damages clause and recalculate damages according to the evidence in the case.  Parties may also work to get the court to strike the liquidated damages clause from the contract so that they can recalculate damages, but this may not work; courts tend to avoid revising agreements.

Punitive Damages

Punitive damages are rare, but these damages can be ordered in some cases.  Courts order punitive damages in addition to payments for any costs or harms produced by the breach of contract.  These damages are used to punish the party that breached the contract and make an example of them to prevent future breaches.  These damages are often calculated based on the jury’s judgement of how severe the breach was.  If the actions taken involve bad faith dealing or verge on fraud or other criminal acts, punitive damages might be justified.  Courts may decide on a fair amount for punitive damages or set damages at two- or three-times the other damages in some cases.

Other Remedies for Breach of Contract

Sometimes money is not enough to make a breach of contract case right.  Especially if the contract dealt with property or commodities that cannot be easily replaced, the court might rule that the parties should turn over the items they withheld or the services they refused.  This commonly happens in real estate litigation since the real estate in question is not interchangeable.  Instead, the purchaser should get what they agreed to.

This may also occur with novel or unique assets, such as art or unique items or processes protected by patents or trade secrets.  In these cases, the court will order the breaching party to turn over the contracted items or perform the services they agreed to perform rather than ordering them to pay monetary damages.  Talk to a lawyer to see if remedies for this kind of “specific performance” are right in your case.

Call Our Baltimore Contract Litigation Lawyers Today

The Baltimore commercial litigation lawyers at the Heyman Law Firm represent businesses and individuals involved in contract disputes, breach of contract cases, and business and commercial litigation.  Our experienced attorneys may be able to take your case and fight to protect your interests, getting you the damages you are entitled to in your breach of contract case.  To set up a legal consultation on your case, contact our law offices today at (410) 305-9287.