Damages in Law

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WHAT ARE DAMAGES?

“Damages” are the remedy demanded in most legal claims, and they come in the form of monetary compensation to the party asserting the claim (the “claimant”) if they win the case.¹Wex Definitions Team, Damages, https://www.law.cornell.edu/wex/damages (last updated Sept. 2021).

Damages are usually the remedy demanded in tort cases, breach of contract cases, and other cases where the claimant could be entitled to monetary compensation due to an undue loss, whether a monetary loss or not. For example, a tort—an act or omission that gives rise to injury or harm to another and amounts to a civil wrong for which courts impose liability²Legal Information Institute, Tort, https://www.law.cornell.edu/wex/tort (last visited Nov. 27, 2022)—could entitle a claimant to monetary compensation, i.e., “damages,” to ease the losses suffered.

TYPES OF DAMAGES

There are many types of damages in law, including, among others, compensatory damages (also known as actual damages), exemplary damages, general damages, incidental damages, liquidated damages, nominal damages, proximate damages, punitive damages, and special damages (also known as consequential damages).

1. COMPENSATORY DAMAGES

Compensatory damages are also known as actual damages and are the most common types of damages awarded. These are damages awarded by a court equivalent to a party’s loss. In other words, these damages are to cover the exact cost—no more, no less—equivalent to the loss.

To determine compensatory damages, the court will look at the market value of the destroyed or damaged property, lost wages or income, and necessarily incurred expenses.³Wex Definitions Team, Compensatory Damages, https://www.law.cornell.edu/wex/compensatory_damages (last updated June 2022).

Compensatory damages are not used to punish the defendant—unlike punitive damages described below—but are awarded to compensate the claimant equivalently for the loss they suffered. Receiving compensatory damages does not prevent a party from also receiving punitive damages.⁴Id.

2. EXEMPLARY DAMAGES

“Exemplary” damages—also known as punitive damages—are applied by the court against a defendant to make an example out of the defendant to deter the conduct of the defendant from reoccurring or being replicated by others in the community. If awarded, exemplary damages are awarded to a winning claimant, thus bolstering the claimant’s recovery.

3. GENERAL DAMAGES

General damages are the intangible losses, inconveniences, pain, and suffering (whether physical or mental), loss of consortium (the inability to have sexual relations with one’s partner as a result of the injuries suffered), etc., caused by the actions of a tortfeasor (the person who committed the tort or the wrong; i.e., the defendant against whom a claim is made).

Since general damages are immaterial, they do not have—or need—an inherent value or any bills or receipts to prove them. However, that means that it can be difficult to calculate—much less precisely quantify—the amount needed to compensate an injured claimant for general damages.

General damages such as mental anguish or embarrassment are unique to each claimant. The severity of the injury (or loss), the skill of counsel, and the sensitivities of a jury are all factors that may determine the amount of the general damages award.

4. INCIDENTAL DAMAGES

According to Uniform Commercial Code § 2-715, incidental damages resulting from a seller’s breach include (i) expenses reasonably incurred in inspection, receipt, transportation, and care and custody of goods rightfully rejected; (ii) any commercially reasonable charges, expenses, or commissions in connection with effecting cover; and (iii) any other reasonable expense incident to the delay or other breach.

For example, incidental damages could be awarded if a construction company breached an employment contract with an employee. The employee could recover incidental damages for the reasonable expenses incurred in attempting to find substitute employment, such as printing resumes or gas for driving to interviews.

5. LIQUIDATED DAMAGES

Liquidated damages are a variety of actual damages and are applied when actual damages are difficult or impossible to prove.⁵Legal Information Institute, Liquidated Damages, https://www.law.cornell.edu/wex/liquidated_damages (last visited Nov. 27, 2022).

For example, liquidated damages could be awarded in the event of a violation of a trade secret. Because it is difficult to ascertain how much a trade secret is worth, and if there were no physical damage, liquidated damages would be awarded in such a case.

Utah Code § 70A-2-718(1) states that damages for breach by either party may be liquidated in the agreement but only at an amount that is reasonable in the light of the anticipated or actual harm caused by the breach, the difficulties of proof of loss, and the inconvenience or lack of feasibility of otherwise obtaining an adequate remedy.

Liquidated damages are usually awarded in cases of breach of contract.⁶The elements of a prima facie case for breach of contract include the existence of a contract; the existence of due performance of the contract duties owed by the party seeking recovery—the claimant; the existence of a breach of any of the contract’s provisions by the other party; and the existence of damages suffered by the claimant due to the breach of contract. See Nuttall v. Berntson, 83 Utah 535, 543,30 P .2d 738, 741 (1934).

6. NOMINAL DAMAGES

Nominal damages are a trivial sum of money awarded to a claimant whose legal right has been technically violated but who has not established that they are entitled to compensatory damages because there was no accompanying loss or harm. Nominal damages are used to vindicate a claimant in court instead of compensating the claimant.⁷Wex Definitions Team, Nominal Damages, https://www.law.cornell.edu/wex/nominal_damages (last updated June 2020).

The amount of a nominal damages award can range from one dollar to one hundred dollars, but the amount ultimately depends on the context of the case. It is common for nominal damages to be awarded when no real damages occur. For example, in a trespass case, “[i]n circumstance[s] where no substantial damages result and none are proved, the law will infer nominal damages for the unauthorized entry onto the real property of another.” ⁸75 Am.Jur.2d Trespass § 51 (1974).

7. PROXIMATE DAMAGES

Proximate damages are the immediate and direct damages and natural results of the act complained of and other damages that are usual and might have been expected.⁹The Law Dictionary, PROXIMATE AND REMOTE DAMAGES Definition & Legal Meaning, https://thelawdictionary.org/proximate-and-remote-damages/ (last visited Nov. 27, 2022).

A way to determine proximate damages is to determine the proximate cause of the damages, which is “that cause which, in a natural and continuous sequence, unbroken by any new cause, produce the injury, and without which the injury would not have occurred.” ¹⁰Bunker v. Union Pac. R.R. Co., 38 Utah 575, 114 P. 764, 775 (1911).

Proximate cause also involves the factor of foreseeability—i.e., was the act producing the injury foreseeable and preventable, and if so, did the defendant have a duty to prevent it? If the event causing the injury constituted a foreseeable risk of harm, and the harm occurred, then proximate cause is established and, therefore, entitles the claimant to an award of proximate damages.

An example of the proximate cause of an injury would be a waitress spilling a tray of water on the floor and failing to clean it up. A customer then slips on the spilled water and breaks their arm. The water spilled on the floor is the proximate cause of the fall because the danger posed by the spilled water constituted a foreseeable and preventable risk of harm.

8. PUNITIVE DAMAGES

Punitive damages—also known as exemplary damages—are awarded to a claimant against a defending party when the defending party’s actions are especially egregious, reckless, or malicious,¹¹Legal Information Institute, Punitive Damages, https://www.law.cornell.edu/wex/punitive_damages (last visited Nov. 27, 2022). and the court finds good cause to punish the defending party for their actions.

Punitive damages are applied and intended to punish the defending party, and they can be awarded at the court’s discretion. Punitive damages are usually awarded concurrently with compensatory damages.¹²Id.

Under Utah Code § 78B-8-201(1)(a), punitive damages may be awarded only if compensatory or general damages are awarded and it is established by clear and convincing evidence that the acts or omissions of the defendant are the results of willful and malicious or intentionally fraudulent conduct, or conduct that manifests a knowing and reckless indifference toward, and a disregard of, the rights of others.

However, it is important to note that punitive damages may be applied to cases in Utah even where compensatory damages were not found, in cases where a defendant is found guilty of,

• the operation of a motor vehicle or motorboat while voluntarily intoxicated or under the influence of any drug or combination of alcohol and drugs;
• causing the death of another person by providing or administering an illegal controlled substance to the person; or
• by providing an illegal controlled substance to any person in the chain of transfer that connects directly to a person who subsequently provided or administered the substance to a person whose death was caused in whole or in part by the substance.¹³Utah Code § 78B-8-201(b)(i)(ii)(iii).

If a party’s rights were technically violated but suffered no harm or losses, a court may grant nominal damages instead.

9. SPECIAL DAMAGES

Special damages are also known as consequential damages.

Special damages in, for example, tort law are medical expenses, car repairs, and other expenses whose value can actually be ascertained.¹⁴Wex Definitions Team, Special Damages, https://www.law.cornell.edu/wex/special_damages (last updated July 2021).

However, in contract law, for example, special damages refer to irregular damages such as physical injuries resulting from a breach of contract.¹⁵Id.

Special damages are a form of remedy that can be claimed by the claimant against the defendant for the harm done as a consequence of the defendant’s actions.¹⁶Wex Definitions Team, Consequential Damages, https://www.law.cornell.edu/wex/consequential_damages (last updated Mar. 2022).

Special damages are designed to return the injured claimant to their financial position before the accident or negligence occurred.

Special damages, in conjunction with general damages as discussed above, are designed to make the claimant whole again.