- Business Dispute? Learn About the Types of Damages That May Be Available
- May 8, 2013
- Law Firm: Sally Fitch LLP - Boston Office
To operate effectively, every business must rely on a number of functional relationships. When one of these relationships breaks down, it can unjustly harm a business that has otherwise made all the right moves.
Business litigation is one way to level the playing field in the wake of a dispute and restore a company to the position is should have justly been in. In many types of business litigation, the best available remedy is monetary damages - and depending on the circumstances of a case, there may be different types of damages available.
Monetary damages may serve wide array of functions in business litigation
Broadly speaking, compensatory damages are the type of damages that arise most often in the context of commercial claims. Compensatory payments made to the plaintiff from the defendant are meant to account for actual loss suffered and should restore the plaintiff to as good a position as would have been the case had the defendant not engaged in the conduct that is the subject of the lawsuit.
Yet, while the destination for the wronged litigant is the point things would have been at had everything gone smoothly, the path can take many forms. There are several distinct types of compensatory damages that may be available in business litigation claims depending on the nature and unique individual circumstances of the case.
Expectation damages are based on the loss of some future, expected stream of income. Lost profit damages can arise in contract disputes, business torts, antitrust litigation and even insurance cases. It is not always easy to calculate an exact numerical value for lost profit damages, but they may be awarded so long as the plaintiff can provide enough evidence for the court to come to a reasonably certain estimate as to the gains that were prevented. Lost profits may be proven in a number of ways, including the use of expert testimony.
Reliance damages are another type of recovery that may be available in business litigation. When the plaintiff acted in reasonable reliance on a promise made by the defendant, and the defendant failed to live up to expectations, damages may be calculated by asking what it would take to restore the plaintiff to the economic position occupied before the reliance. Unlike expectation damages, reliance damages are not based on a projection of profit, but rather some defined loss that was suffered.
Restitution damages may be awarded in certain breach of contract cases; unlike expectation damages or reliance damages, restitution is not based on loss suffered, but on the benefit conferred to the non-breaching party. Under a theory of restitution, the plaintiff would be entitled to the value of whatever was given to the defendant when there was a contract in place.
Liquidated damages are specific damages previously identified by the parties themselves in a contract. Liquidated damages should be a reasonable estimate of actual damages that might result from a breach of the contract; if liquidated damages are nominal and clearly not an attempt to approximate actual damages, they might not be judicially upheld.
Punitive damages, while not often awarded in a business setting, are also worth noting. Punitive damages are payments that a party must make for a wrongful act over and above the point that would fully compensate the other party. Punitive damages should be expected only in cases of particularly egregious wrongdoing.
Contact a business litigation attorney to pursue recovery in a business dispute
Business litigation can be very complex, and it may not be clear at the outside what kind of damages you need to pursue following a dispute. However, an experienced business litigation attorney can provide an assessment of your case and explain which types of damages may be applicable. If you have encountered a business dispute, you should speak with an attorney as soon as possible to explore the full range of potential legal remedies.