Damages always result in the payment of money. However, the basis or purpose for awarding damages determines how much money is awarded. The purpose of damages always is to make the plaintiff whole, but making the plaintiff whole means different things in different situations.
Damages must have been foreseeable at the time a contract is made or at the time the tort occurs. Damages which are too far removed from the contract are not foreseeable and cannot be awarded. In addition, the plaintiff has a duty to mitigate his damages. In other words, he must take reasonable steps to minimize his losses. If he fails to mitigate, his damage award is reduced by the amount of loss that could have been prevented through mitigation. Both compensatory damages and restitution must be proved with a “reasonable degree of certainty” at the time of trial. This means the plaintiff must provide evidence of his losses when he seeks either compensatory damage or restitution.
Compensatory Damages
Compensatory damages focus on the plaintiff’s losses. Compensatory damages are further classified as either general damages or special damages. Special damages may be called consequential damages in some jurisdictions. By black-letter definition, general damages are those losses which anyone in the plaintiff’s situation would incur.
The goals of general damages and special damages are the same in both contract and tort cases, because the basis for the losses are different, the damages may seem to be different.
Punitive Damages
Sometimes called exemplary damages, the purpose of punitive damages is to punish the defendant for outrageous conduct, such as causing injury while driving under the influence of alcohol or a controlled substance. Punitive damages are not allowed in some states. Where they are allowed, they serve the purpose of teaching a lesson to the defendant.
Nominal Damages
The purpose of nominal damages is to vindicate a right which has been violated when no monetary loss has occurred. A court typically awards a trivial amount plus court costs in that situation.
Liquidated Damages
Liquidated damages arise in contract cases only. They are damages agreed to by the parties at the time the contract is made, and they represent the parties’ reasonable estimate of losses in the event of breach.
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