Almost every business and commercial relationship is based on a contract, often written, that sets out the relationship’s terms and conditions. When one party breaches a contract, another party has a potential claim for damages.

How are damages for breach of contract calculated?

In a breach of contract claim, a Court generally awards the amount of monetary damages required to place the plaintiff in the position that it would have occupied had the contract been performed. Upon proving that a valid contract existed and that the defendant breached it, a plaintiff is entitled to be “made whole” for its losses.

The exact method used to calculate damages varies depending on the details of the agreement and nature of the breach. In some cases, the contract itself sets out a method for assessing losses. In other cases, and particularly with contracts for the provision of goods or services, the Court may rely on the market value of the relevant items.

Making the wronged party whole may include reimbursement for any expenses incurred as a result of the breach, as well as the costs of mitigating their ongoing losses, and any lost profits. Any “natural and direct” results of the breach must be compensated by a defendant found liable for breach of contract; however, the Court will not award damages for any consequences that are unduly remote from the defendant’s wrongful act.

Where the party breaching a contract has behaved in a manner deemed reprehensible, morally repugnant or otherwise inappropriate, the Court may also award aggravated or punitive damages in excess of those calculated to compensate the aggrieved party.

Kitchener Waterloo contract lawyers advising businesses and individuals

At Duncan, Linton LLP, we assist clients with every stage of contractual matters, from drafting and review of commercial contracts to advising in breach of contract litigation. Our lawyers also have extensive experience in construction matters, offering insightful advice about contracts and other issues to parties at every level of the industry. Contact us online or call 519-886-3340 to make an appointment with one of our lawyers.