What Are Common Examples of Compensation for Breach of Contract in Maryland?

When a contract is broken, it can have grave consequences for the other party.  Many businesses rely on their contracts coming through and can face huge financial loss when another party does not uphold its end of the bargain.  If you are involved with a breach of contract case, it is important to understand the potential consequences.  Though other options are available, many cases see monetary damages as the most common form of relief.  But what exactly do these money damages cover?  Baltimore breach of contract lawyer William Heyman explains some common examples of breach of contract compensation.

Types of Damages for Breach of Contract Cases in MD

When a contract is broken, the party who breached the agreement often must pay the other side.  But what exactly do they pay for?  Some of the following are common examples or categories of damages for breach of contract cases:

Liquidated Damages

One part of making a contract is predicting possible outcomes and planning for the worst.  In the case of breach, many contracts specify the specific damages that should be paid.  Rather than arguing about damages later, the contract specifies a certain amount, known as “liquidated damages.”  There may be opportunities to expand these damages if unforeseen consequences arise, depending on the terms of the agreement.

General Damages

This is a broad category of damages, referring to the harms that the breach directly causes, many of which will be discussed below.  In most cases, these damages are clear and obvious results of the breach, and the breaching party would be able to anticipate them.  For instance, if a seller fails to deliver, they should know that the price of the order needs to be refunded.

Consequential Damages

As the name implies, these are damages are consequences of the breach.  However, where general damages are obvious results, consequential damages are often a step removed.  In many cases, the victim of the breach needs to prove that the breaching party knew this consequence would result, and only then can they recover these damages.  For instance, if a buyer told a seller that they needed parts by a deadline to complete a larger project, but the seller delivered the parts a week late, the breaching party may be on the hook for any damages the other party faced because they were unable to complete the project on time.

Cost of Replacement

In many contract dispute cases, buyers order items or parts for resale or for use in other products they create.  If the seller breaches a contract by delivering the wrong parts or not delivering on time, the buyer may need to turn to another seller to get the parts on time.  The cost to replace the original order may mean paying more for the parts or for shipping to meet deadlines.  When the buyer sues the first seller for breach, they may be able to recover the increase in cost for the replacement parts.  These are considered general damages.

Delivery Costs

Many orders and services include the cost of shipping and handling.  Especially for large materials or huge stocks of items, these costs can be incredibly high.  Many times, breaches involve sellers getting orders wrong – which means the buyer needs to return them.  The cost of shipping and similar consequences would be included as general damages in cases like this.

Legal Fees

If it weren’t for the breach of contract, the victim would not have to hire a Columbia contract dispute lawyer.  This may mean that attorney’s fees are obviously a result of the breach – but they cannot always collect the fees as damages.  In the US, parties usually pay their own legal fees.  However, some statutes and contracts allow fees to be shifted to the losing party.  These are very case-specific damages and depend heavily on the applicable law and terms of the contract.

Restitution

Some contracts are voided by the court because they were formed under duress or fraud, or because they were formed by someone who was legally incompetent.  When courts use “rescission” to undo these contracts, they may order restitution damages to restore the parties to where they were before the contract was formed.  This means paying back any costs or fees under the contract and returning anything of value that changed hands.

Quantum Meruit Damages

This Latin phrase translates to something like “what one has earned.”  Some contracts may not account for the cost of services, leaving that to discussion outside the terms of the agreement.  Other times, a contract falls through after some amount of services are already performed.  During a breach, a party who performed some tasks may be able to sue for the fair value of their labor and services on a quantum meruit basis with their Towson contract dispute attorney.  This is essentially a pro-rated payment for services rendered.

Punitive Damages – Not Available

Although parties often want to punish the other side, these damages are not available for a breach of contract claim.  However, in the case of fraudulent or other egregious conduct, different claims (such as fraud) can be pursued that may lead to an award of punitive damages.

Baltimore Breach of Contract Lawyer

William Heyman has over 20 years of experience working with corporate and financial clients in business litigation, contract disputes, and other areas of law.  To schedule a consultation with our Baltimore corporate and business litigation attorneys, contact the Heyman Law Firm today at (410) 305-9287.