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Figure 12.3TypeActual DamagesCompensatory DamagesConsequential DamagesIncidental DamagesLiquidated DamagesNominal DamagesPunitive DamagesSpeculative DamagesDamagesDescriptionAn amount of money awarded for damages directly attributable to another party’s breachof contract or tort; for example, physician’s fees when one party wrongly injures another,and financial losses resulting from failure to deliver goods already contracted for.An award of an amount of money that compensates a plainiff for the injuries suffered andnothing more.Damage, loss, or injury (such as loss of profits) that does not flow directly and immediatelyfrom the act of the party but only from some of the consequencesor results of the act.Reasonable expenses that indirectly result from a breach of contract. They include expensessuch as those incurred in stopping delivery of goods, transporting goods, and caring forgoods that have been rightfully rejected by a buyer.An amount of anticipated damages, agreed to by both parties and contained in a contract,to be the basis of any award in the event of a breach of the contract.Damages awarded by a court when a successful plaintiff has proven a legal injury but noactual resulting damages; six cents by common law, usually $1 today.Damages in excess of losses suffered by the plaintiff awarded to the plaintiff as a measureof punishment for the defendant’s wrongful act. Also called exemplary damages becausethey set an example of punishment awaiting other wrongdoers.Damages not founded on fact but on the expectations that a party may have hoped forfrom a contract that has been breached; not allowed in any claim for money damages.DAMAGESSuing for money damages isone remedy for breach ofcontract. What is theobjective of awardingdamages to the injuredparty in a contract case?what damages may be recovered if either one breaches the contract. Thelaw requires that liquidated damages be reasonable.Example 13. The Young Supply Company ordered a sortingmachine for its new distribution center, which was being built inSacramento. The machine was a vital link in delivering manyproducts to the firm’s customers. The Young Company insertedin its contract with the machine seller the following terms: “TheYoung Company will be paid $500 each day beyond the dateagreed upon for delivery of said machine if the machine isdelivered late.” Considering the profits that might be lost throughdelay in delivery, the liquidated damages provision would be consideredreasonable and proper.Minimizing DamagesAn injured party must take all reasonable steps to minimize the damagesthat might result from the other party’s failure of performance. At252 Unit 2: Entering Into Contracts