When purchasing supplies, providing services or any other number of functions in the course of doing business, you will likely enter contracts with other people or companies. Legally binding, all parties involved often have the reasonable expectation that they will all carry out their obligations as specified in their contracts. If they fail to do so, however, it sometimes gives cause for you to take legal action.
As a business owner, it benefits you to understand the possible damages you may recover if other parties fail to uphold their end of commercial contracts.
According to the Judicial Council of California Civil Jury Instructions, in breach of contract cases, the court will typically award general damages. Such compensation covers losses directly arising from the breach. For instance, your contract with an outside source to print menus for your restaurant. Although you paid for half of the balance before the job, the printer did not fulfill your order. The court may order the printer to reimburse you.
Additionally, the court sometimes also awards special damages. For example, these incidental damages may include lost business opportunities because of the breach, adverse effects on your personal or business reputation, or income lost because of construction delays or cancellations. They do not, however, include compensation for emotional distress or mental suffering. With few exceptions, the court only awards special damages if the breaching party knew or reasonably should have known about the circumstances when entering the contract.
If someone with whom you share a business relationship breaches your contract, you will likely consider options such as filing a lawsuit to recover compensatory damages.