Contractual damages—general principles
Produced in partnership with Zainab Hodgson and Kavidha Clare of CMS
Contractual damages—general principles

The following Dispute Resolution practice note Produced in partnership with Zainab Hodgson and Kavidha Clare of CMS provides comprehensive and up to date legal information covering:

  • Contractual damages—general principles
  • Compensatory function of damages for breach of contract
  • Main categories of damages for contractual breach
  • Nominal damages for breach of contract
  • Nominal damages only—public policy
  • Least burdensome obligation rule
  • Cost of cure or diminution in value?
  • Date by reference to which damages are assessed
  • Sale of Goods Act 1979—non acceptance of goods
  • Sale of Goods Act 1979—breach of warranty
  • More...

This Practice Note considers the general principles of recovering damages for contractual breach, starting with the compensatory function of damages and the different kinds of damages for pecuniary and non-pecuniary losses, as well as nominal damages, damages under the Sale of Goods Act 1979 (SGA 1979), default damages clauses, contractual mechanisms for dealing with breach and interest on damages.

Compensatory function of damages for breach of contract

The normal function of damages for breach of contract is the same as that in tort, namely, compensatory. The aim being to compensate the true loss suffered by the innocent party and place them in the same position, so far as money can do it, as if the contract had been performed. To this extent (and while there are exceptions, such as in gains-based damages) whereas damages in tort are generally intended to place the claimant as nearly as possible in the same position as they would have been in if the tort had not been committed; the law of contract gives effect to consensual agreements entered into by particular individuals in their own interests. Remedies granted by the courts are designed to give effect to what was voluntarily undertaken by the parties.

Therefore:

  1. damages in contract are intended to place the claimant in the same position as they would have been in if the contract had been performed

  2. damages

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