Breach of Contract in San Diego: The Types of Damages Available

If you are running a business in San Diego or in any other part of California, you are constantly dealing with contracts. Hopefully it is rare, but at some point, you may end up in a contract dispute. Either your business is going to claim “breach of contract” or you will be accused of “breach of contract.” To help avoid litigation, you should have your contracts reviewed and drafted by an experienced and trusted business lawyer. But, if litigation happens, here are the types of damages that might be claimed.

General Contract Damages in San Diego

The California Civil Code states that the measure of damages for breach of contract is “the amount which will compensate the party aggrieved for all the detriment proximately caused thereby, or which, in the ordinary course of things, would be likely to result therefrom…” See Cal. Civ. Code § 3300. However, the damages must be “clearly ascertainable in both their nature and origin” and not speculative. See Cal. Civ. Code § 3301. Finally, in general, compensatory damages are limited to those within the contemplation of the parties at the time of contracting — that is, “reasonably foreseeable” damages. See Applied Equipment Corp. v. Litton Saudi Arabia Ltd., 869 P.2d 454 (Cal. Supreme Court 1994).

Contract damages are intended to enforce the intentions of the parties to the agreement; that is, give them the benefit of their bargain. As the court said in Applied Equipment, damages awarded to an injured party for breach of contract “seek to approximate the agreed-upon performance.” At the same time, contract damages cannot exceed what it would have received if the contract had been fully performed. See Cal. Civ. Code § 3358. General damages are often characterized as those that flow directly and necessarily from a breach of contract, or that are a natural result of a breach. Lost profits, cost of repair, loss of use, shipping/relocation expenses, loss of value, and cost of replacement are good examples of general damages.

Special Contract Damages in San Diego

Generally, speaking special contract damages are not allowable because such are not normally “foreseeable” in a commercial contractual transaction. However, if some particular special circumstance is communicated, then special damages might be available. Likewise, if the subject of the contract is something special, then again, special damages might be available. Damages for emotional distress is an example of special damages. As noted, such are not allowed unless such are specifically bargained for. Thus, in Erlich v. Menezes, 981 P. 2d 978 (Cal. Supreme Court 1999) it was held that damages for emotional distress could not be recovered for breach of contract for building a home. By contrast, where a family had contracted for a private burial service, emotional distress damages were available when the funeral home failed to maintain the privacy of the funeral. Ross v. Forest Laum Memorial Park, 203 Cal.Rptr. 468 (Cal. App. 1984)

Liquidated Damages in San Diego

Some contracts involve subject matters and economics that are inherently difficult to predict and prove in a court of law. In those cases, the parties can agree on “liquidated damages” which are a set amount of damages in the event that the contract is breached. Liquidated damages are allowed when, at the time of contracting, it is “impracticable or extremely difficult to fix the actual damage.” Cal. Civ. Code § 1671. If you have a contract containing a liquidated damages clause or you are contemplating inserting such a clause, it is best to seek legal counsel.

Nominal Damages in San Diego

It is rare, but occasionally, a plaintiff is entitled to recover nominal damages for the breach of a contract, despite the inability to prove the actual amount of damages flowing from the breach. Such would, when appropriate, entitle the plaintiff to costs of suit. See Cal. Civ. Code § 3360

Punitive Damages in San Diego

Punitive damages are NOT allowed for a normal breach of contract. Punitive damages are a form of damages that are meant to be a punishment.

Other Breach of Contract Remedies in San Diego

In addition to seeking monetary damages, there are a few other remedies available for breach of contract. These include:

• Restitution
• Rescission/cancellation of the contract
• Specific performance

Contact San Diego Corporate Law

As said above, the best way to avoid litigation of breach of contract is to have your business contracts reviewed and drafted by an experienced and skilled business attorney like Michael Leonard, Esq., of San Diego Corporate Law. Mr. Leonard has the experience to draft your contracts properly to help avoid ending up in court. With all business contracts, it is essential for all parties to do their due diligence, investigate the essential elements of the bargain, and avoid the foreseeable consequences of non-performance. San Diego Corporate Law focuses on legal services for San Diego businesses. Contact Mr. Leonard by email or by calling (858) 483-9200.

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