Law is a system of rules and guidelines which are enforced through social institutions to govern behavior, wherever possible. It shapes politics, economics and society in numerous ways and serves as a social mediator of relations between people. Contract law regulates everything from buying a bus...
is an award, typically of money
Money is any object or record that is generally accepted as payment for goods and services and repayment of debts in a given country or socio-economic context. The main functions of money are distinguished as: a medium of exchange; a unit of account; a store of value; and, occasionally in the past,...
, to be paid to a person as compensation for loss or injury; grammatically, it is a singular noun, not plural.
Compensatory damages, called actual damages
, are paid to compensate the claimant for loss, injury, or harm suffered as a result of (see requirement of causation
Causation in English law concerns the legal tests of remoteness, causation and foreseeability in the tort of negligence. It is also relevant for English criminal law and English contract law....
) another's breach of duty.
Neal Townsend signs a contract agreeing to buy 10 hours of landscaping services from Wisda's Landscaping for $50 an hour. If Neal Townsend breaks the contract and doesn't use any of Wisda's Landscaping's services, compensatory damages paid to Wisda's Landscaping would be $500, which is the economic loss they suffered. If Wisda's Landscaping breaks the contract, and Neal Townsend is forced to hire another service for $60 an hour, compensatory damages paid to Neal Townsend would equal $100 ($10 an hour, the difference in price between the original contract and the new contract).
Breach of contract duty - (ex contractu)
On a breach of contract by a defendant, a court generally awards the sum that would restore the injured party to the economic position they expected from performance of the promise or promises (known as an "expectation measure" or "benefit-of-the-bargain" measure of damages).
When it is either not possible or not desirable to award the victim in that way, a court may award money damages designed to restore the injured party to the economic position s/he occupied at the time the contract was entered (known as the "reliance measure
Reliance damages is the measure of compensation given to a person who suffered an economic harm for acting in reliance on a party who failed to fulfill their obligation.-Scope:...
"), or designed to prevent the breaching party from being unjustly enriched ("restitution") (see below).
Parties may contract for liquidated damages
Liquidated damages are damages whose amount the parties designate during the formation of a contract for the injured party to collect as compensation upon a specific breach ....
to be paid upon a breach of the contract by one of the parties. Under common law, a liquidated damages clause will not be enforced if the purpose of the term is solely to punish a breach (in this case it is termed penal damages
Penal damages are best seen as quantitatively excessive liquidated damages and are invalid under the common law. While liquidated damages are a priori calculations of expectation loss under the contract, penal damages go further and seek to penalise a party in some way for breach of a clause above...
). The clause will be enforceable if it involves a genuine attempt to quantify a loss in advance and is a good faith estimate of economic loss. Courts have ruled as excessive and invalidated damages which the parties contracted as liquidated, but which the court nonetheless found to be penal.
Breach of tort duty - (ex delicto)
Damages in tort are generally awarded to place the claimant in the position that would have been taken had the tort not taken place. Damages in tort
A tort, in common law jurisdictions, is a wrong that involves a breach of a civil duty owed to someone else. It is differentiated from a crime, which involves a breach of a duty owed to society in general...
are quantified under two headings: general damages and special damages.
In personal injury claims, damages for compensation are quantified by reference to the severity of the injuries sustained (see below general damages for more details). In non-personal injury claims, for instance, a claim for professional negligence against solicitors, the measure of damages will be assessed by the loss suffered by the client due to the negligent act or omission by the solicitor giving rise to the loss. The loss must be reasonably foreseeable and not too remote. Financial losses are usually simple to quantify but in complex cases which involve loss of pension entitlements and future loss projections, the instructing solicitor will usually employ a specialist expert actuary or accountant to assist with the quantification of the loss.
, sometimes styled hedonic damages
Hedonic Damages, an economic term of art, refers to loss of enjoyment of life damages, the intangible value of life, as distinct from the human capital value or lost earnings value.- History :...
, compensate the claimant for the non-monetary aspects of the specific harm suffered. This is usually termed 'pain, suffering and loss of amenity'. Examples of this include physical or emotional pain and suffering, loss of companionship, loss of consortium
Loss of consortium is a term used in the law of torts that refers to the deprivation of the benefits of a family relationship due to injuries caused by a tortfeasor. Loss of consortium arising from personal injuries was recognized under the English common law...
, disfigurement, loss of reputation, loss or impairment of mental or physical capacity, loss of enjoyment of life, etc. This is not easily quantifiable, and depends on the individual circumstances of the claimant. Judges in the United Kingdom base the award on damages awarded in similar previous cases.
General damages are generally awarded only in claims brought by individuals, when they have suffered personal harm. Examples would be personal injury (following the tort of negligence by the defendant), or the tort of defamation.
Speculative damages are damages claimed by a plaintiff for losses that may occur in the future, but are highly improbable. They can not be used as a basis for recovery in tort or contract cases...
are damages that have not yet occurred, but the plaintiff expects them to. Typically, these damages cannot be recovered unless the plaintiff can prove that they are reasonably likely to occur.
Quantification of personal injury claims
The quantification of personal injury is not an exact science. In English law solicitors like to call personal injury claims as “general damages” for pain and suffering and loss of amenity (PSLA). Solicitors quantify personal injury claims by reference to previous awards made by the courts which are “similar” to the case in hand. The guidance solicitors will take into account to help quantify general damages are as hereunder:
1 The age of the client
The age of the client is important especially when dealing with fatal accident claims or permanent injuries. The younger the injured victim with a permanent injury the longer that person has to live with the PSLA. As a consequence, the greater the compensation payment. In fatal accident claims, generally the younger deceased, the greater the dependency claim by the partner and children.
2 The nature and extent of the injuries sustained.
Solicitors will consider “like for like” injuries with the case in hand and similar cases decided by the courts previously. These cases are known as precedents. Generally speaking decisions from the higher courts will bind the lower courts. Therefore, judgments from the House of Lords and the Court of Appeal have greater authority than the lower courts such as the High Court and the County Court. A compensation award can only be right or wrong with reference to previous judgments. Sometimes it is a matter of opinion of how much an injury claim is worth and the skill of the solicitor is persuading the opponent and ultimately the judge that their assessment is right. Solicitors must be careful when looking at older cases when quantifying a claim to ensure that the award is brought up to date and to take into account the court of appeal case in Heil v Rankin Generally speaking the greater the injury the greater the damages awarded.
A quick guide to assess personal injury claims is by reference to the Judicial Studies Board Guidelines for the Assessment of General Damages in Personal Injury Cases http://ukcatalogue.oup.com/product/9780199595334.do
. Some case examples can also be considered http://workaccidents.org.uk/compensation-claims/
3 Gender of the client
Generally speaking damages for personal injury for males and females are the same. However where there can be a difference weighted in favour of females is where the injury results in permanent scarring to the skin. Where the scarring is clearly visible such as the face, legs, and arms, females will usually obtain a greater amount of compensation than males. The compensation reflects the general assumption that females will be affected more than males by scarring and thus will be awarded more. However each case will be decided on its own particular facts. For instance a male model who sustains a scarring tissue to his face may obtain just as much as a female.
4 Personal attributes and fortitude of the client
This heading is inextricably linked with the other points above. Where two clients are of the same age, experience and suffer the same injury, it does not necessarily mean that they will be affected the same. We are all different. Some people will recover more quickly than others. The courts will assess each claim on its own particular facts and therefore if one claimant recovers more quickly than another, the damages will be reflected accordingly. It is important to note here that “psychological injuries” may also follow from an accident which may increase the quantum of damages.
When a personal injury claim is settled either in court or out of court, the most common way the compensation payment is made is by a lump sum award in full and final settlement of the claim. Once accepted there can be no further award for compensation at a later time unless the claim is settled by provisional damages often found in industrial injury claims such as asbestos related injuries.
compensate the claimant for the quantifiable monetary losses suffered by the plaintiff. For example, extra costs, repair or replacement of damaged property, lost earnings (both historically and in the future), loss of irreplaceable items, additional domestic costs, and so on. They are seen in both personal and commercial actions.
Special damages can include direct losses (such as amounts the claimant had to spend to try to mitigate problems) and consequential or economic losses resulting from lost profits in a business. Special damages basically include the compensatory and punitive damages for the tort committed in lieu of the injury or harm to the plaintiff.
Damages in tort are awarded generally to place the claimant in the position in which he would have been had the tort not taken place. Damages for breach of contract are generally awarded to place the claimant in the position in which he would have been had the contract not been breached. This can often result in a different measure of damages. In cases where it is possible to frame a claim in either contract or tort, it is necessary to be aware of what gives the best outcome.
If the transaction was a "good bargain" contract generally gives a better result for the claimant.
As an example, Neal sells Mary a watch for £100. Neal tells Mary it is an antique Rolex. In fact it is a fake one and worth £50. If it had been a genuine antique Rolex, it would be worth £500. Neal is in breach of contract and could be sued. In contract, Mary is entitled to an item worth £500, but she has only one worth £50. Her damages are £450. Neal also induced Mary to enter into the contract through a misrepresentation (a tort). If Mary sues in tort, she is entitled to damages that put herself back to the same financial position place she would have been in had the misrepresentation not been made. She would clearly not have entered into the contract knowing the watch was fake, and is entitled to her £100 back. Thus her damages in tort are £100. (However, she would have to return the watch, or else her damages would be £50.)
If the transaction were a "bad bargain", tort gives a better result for the claimant. If in the above example Mary had overpaid, paying £750 for the watch, her damages in contract would still be £450 (giving him the item he contracted to buy), however in tort damages are £700. This is because damages in tort put her in the position she would have been in had the tort not taken place, and are calculated as her money back (£750) less the value of what she actually got (£50).
Incidental and consequential losses
Special damages are sometimes divided into incidental damages
Incidental Damages are a type of legal damages, , that are reasonably associated with or related to actual damages....
, and consequential damages
Consequential damages, otherwise known as special damages, is one of the damages, the other being direct damages, that may be awarded to plaintiff in a civil action who claims that terms of an agreement were not honored....
Incidental losses include the costs needed to remedy problems and put things right. The largest element is likely to be the reinstatement of property damage. Take for example a factory which was burnt down by the negligence of a contractor. The claimant would be entitled to the direct costs required to rebuild the factory and replace the damaged machinery.
The claimant may also be entitled to any consequential losses. These are the lost profits that the claimant could have been expected to make in the period whilst the factory was closed and rebuilt.
Recovery of damages is subject to the legal principle that damages must be proximately caused by the wrongful conduct of the defendant. This is known as the principle of proximate cause. This principle governs the recovery of all compensatory damages, whether the underlying claim is based on contract, tort, or both. Damages are likely to be limited to those reasonably foreseeable by the defendant. If a defendant could not reasonably have foreseen that someone might be hurt by their actions, there may be no liability.
This rule does not usually apply to intentional torts (for example, deceit), and also has stunted applicability to the quantum in negligence where the maxim Intended consequences are never too remote
applies 'never' is inaccurate here but resorts to unforeseeable direct and natural consequences of an act.
Quantifying losses in practice expert evidence
It may be useful for the lawyers for the plaintiff and/or the defendant to employ forensic accountants
Forensic accounting is the specialty practice area of accountancy that describes engagements that result from actual or anticipated disputes or litigation. "Forensic" means "suitable for use in a court of law", and it is to that standard and potential outcome that forensic accountants generally...
or forensic economists
Forensic economics is the scientific discipline that applies economic theories and methods to the issue of pecuniary damages as specified by case law and legislative codes...
to give evidence on the value of the loss. In this case, they may be called upon to give opinion evidence as an expert witness
An expert witness, professional witness or judicial expert is a witness, who by virtue of education, training, skill, or experience, is believed to have expertise and specialised knowledge in a particular subject beyond that of the average person, sufficient that others may officially and legally...
Statutory damages are a damage award in civil law, in which the amount awarded is stipulated within the statute rather than being calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in which it is difficult to determine a precise value of...
are an amount stipulated within the statute rather than calculated based on the degree of harm to the plaintiff. Lawmakers will provide for statutory damages for acts in which it is difficult to determine the value of the harm to the victim. Mere violation of the law can entitle the victim to a statutory award, even if no actual injury occurred. These are similar to, but different from, nominal damages (see below), in which no written sum is specified.
For example, United States Civil Code 18 USC §§2520 provides for statutory damages to victims of various wiretapping offences. The Lanham (Trademark) Act
The Lanham Act is a piece of legislation that contains the federal statutes of trademark law in the United States. The Act prohibits a number of activities, including trademark infringement, trademark dilution, and false advertising.-History:Named for Representative Fritz G...
provides for minimum damages of $500 per type of item, for goods sold with unauthorized use of a trademark (15 U.S.C. § 1117(c), Lanham Act Section 35(c).). In copyright law, European directive 2004/48/EC on the Enforcement of Intellectual Property Rights bases damages on, "the amount of royalties which would have been due if the infringer has requested authorisation".
On the other hand, nominal damages are very small damages awarded to show that the loss or harm suffered was technical rather than actual. Perhaps the most famous nominal damages award in modern times has been the $1 verdict against the National Football League
The National Football League is the highest level of professional American football in the United States, and is considered the top professional American football league in the world. It was formed by eleven teams in 1920 as the American Professional Football Association, with the league changing...
(NFL) in the 1986 antitrust suit prosecuted by the United States Football League
The United States Football League was an American football league which was in active operation from 1983 to 1987. It played a spring/summer schedule in its first three seasons and a traditional autumn/winter schedule was set to commence before league operations ceased.The USFL was conceived in...
. Although the verdict was automatically trebled
Treble damages, in law, is a term that indicates that a statute permits a court to triple the amount of the actual/compensatory damages to be awarded to a prevailing plaintiff, generally in order to punish the losing party for willful conduct. Treble damages are a multiple of, and not an addition...
pursuant to antitrust law in the United States, the resulting $3 judgment was regarded as a victory for the NFL. Historically, one of the best known nominal damage awards was the farthing that the jury
A jury is a sworn body of people convened to render an impartial verdict officially submitted to them by a court, or to set a penalty or judgment. Modern juries tend to be found in courts to ascertain the guilt, or lack thereof, in a crime. In Anglophone jurisdictions, the verdict may be guilty,...
awarded to James Whistler
James Abbott McNeill Whistler was an American-born, British-based artist. Averse to sentimentality and moral allusion in painting, he was a leading proponent of the credo "art for art's sake". His famous signature for his paintings was in the shape of a stylized butterfly possessing a long stinger...
in his libel suit against John Ruskin
John Ruskin was the leading English art critic of the Victorian era, also an art patron, draughtsman, watercolourist, a prominent social thinker and philanthropist. He wrote on subjects ranging from geology to architecture, myth to ornithology, literature to education, and botany to political...
. In the English jurisdiction, nominal damages are generally fixed at £2.
Many times a party that has been wronged but is not able to prove significant damages will sue for nominal damages. This is particularly common in cases involving alleged violations of constitutional rights, such as freedom of speech.
Punitive damages (non-compensatory)
Generally, punitive damages
, which are also termed exemplary damages
in the United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, are not awarded in order to compensate the plaintiff, but in order to reform or deter the defendant and similar persons from pursuing a course of action such as that which damaged the plaintiff. Punitive damages are awarded only in special cases where conduct was egregiously invidious and are over and above the amount of compensatory damages, such as in the event of malice
Malice may refer to:* Malice , a legal term describing the intent to harm* Jerry Tuite , American professional wrestler also known by the ring name Malice-Entertainment:...
or intent. Great judicial restraint is expected to be exercised in their application. In the United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
punitive damages awards are subject to the limitations imposed by the due process of law clauses of the Fifth
The Fifth Amendment to the United States Constitution, which is part of the Bill of Rights, protects against abuse of government authority in a legal procedure. Its guarantees stem from English common law which traces back to the Magna Carta in 1215...
and Fourteenth Amendments
The Fourteenth Amendment to the United States Constitution was adopted on July 9, 1868, as one of the Reconstruction Amendments.Its Citizenship Clause provides a broad definition of citizenship that overruled the Dred Scott v...
to the United States Constitution
The Constitution of the United States is the supreme law of the United States of America. It is the framework for the organization of the United States government and for the relationship of the federal government with the states, citizens, and all people within the United States.The first three...
England is a country that is part of the United Kingdom. It shares land borders with Scotland to the north and Wales to the west; the Irish Sea is to the north west, the Celtic Sea to the south west, with the North Sea to the east and the English Channel to the south separating it from continental...
Wales is a country that is part of the United Kingdom and the island of Great Britain, bordered by England to its east and the Atlantic Ocean and Irish Sea to its west. It has a population of three million, and a total area of 20,779 km²...
, exemplary damages are limited to the circumstances set out by Lord Patrick Devlin in the leading case of Rookes v. Barnard
Rookes v Barnard  is a UK labour law case and the leading case in English law on punitive damages and was a turning point in judicial activism against trade unions....
. They are:
- Oppressive, arbitrary or unconstitutional actions by the servants of government.
- Where the defendant's conduct was 'calculated' to make a profit for himself.
- Where a statute expressly authorises the same.
Rookes v Barnard has been much criticised and has not been followed in Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
or by the Privy Council
A privy council is a body that advises the head of state of a nation, typically, but not always, in the context of a monarchic government. The word "privy" means "private" or "secret"; thus, a privy council was originally a committee of the monarch's closest advisors to give confidential advice on...
Punitive damages awarded in a US case would be difficult to get recognition for in a European court, where punitive damages are most likely to be considered to violate ordre public.
This type of damages are rarely awarded. They are given when the plaintiff's suit is trivial, used only to settle a point of honour or law. Awards are usually of the smallest amount, usually 1 cent or similar. Court costs are not awarded.
Aggravated damages are not often awarded; they apply where the injury has been aggravated by the wrongdoer's behaviour, for example, their cruelty.
Restitutionary or disgorgement damages
In certain areas of the law another head of damages has long been available, whereby the defendant is made to give up the profits made through the civil wrong in restitution
The law of restitution is the law of gains-based recovery. It is to be contrasted with the law of compensation, which is the law of loss-based recovery. Obligations to make restitution and obligations to pay compensation are each a type of legal response to events in the real world. When a court...
. Doyle and Wright define restitutionary damages as being a monetary remedy that is measured according to the defendant's gain rather than the plaintiff's loss. The plaintiff thereby gains damages which are not measured by reference to any loss sustained. In some areas of the law this heading of damages is uncontroversial; most particularly intellectual property
Intellectual property is a term referring to a number of distinct types of creations of the mind for which a set of exclusive rights are recognized—and the corresponding fields of law...
rights and breach of fiduciary relationship.
In England and Wales the House of Lords
The House of Lords is the upper house of the Parliament of the United Kingdom. Like the House of Commons, it meets in the Palace of Westminster....
case of Attorney-General v. Blake
opened up the possibility of restitutionary damages for breach of contract. In this case the profits made by a defecting spy, George Blake
George Blake is a former British spy known for having been a double agent in the service of the Soviet Union. Discovered in 1961 and sentenced to 42 years in prison, he escaped from Wormwood Scrubs prison in 1966 and fled to the USSR...
, for the publication of his book, were awarded to the British Government for breach of contract. The case has been followed in English courts, but the situations in which restitutionary damages will be available remain unclear.
The basis for restitutionary damages is much debated, but is usually seen as based on denying a wrongdoer any profit from his wrongdoing. The really difficult question, and one which is currently unanswered, relates to what wrongs should allow this remedy.
In addition to damages, the successful party is entitled to be awarded his reasonable legal costs that he spent during the case. This is the rule in most countries other than the United States. In the United States, a party generally is not entitled to its attorneys' fees or for hardships undergone during trial, although a few exceptions exist, such as discrimination
Discrimination is the prejudicial treatment of an individual based on their membership in a certain group or category. It involves the actual behaviors towards groups such as excluding or restricting members of one group from opportunities that are available to another group. The term began to be...
. See American rule
Among the Saxons
Anglo-Saxon is a term used by historians to designate the Germanic tribes who invaded and settled the south and east of Great Britain beginning in the early 5th century AD, and the period from their creation of the English nation to the Norman conquest. The Anglo-Saxon Era denotes the period of...
, a price called Weregeld
was paid for homicide
Homicide refers to the act of a human killing another human. Murder, for example, is a type of homicide. It can also describe a person who has committed such an act, though this use is rare in modern English...
by the killer, in part to the family of the victim, in part to the local king.
- Arbitration award
An arbitration award is a determination on the merits by an arbitration tribunal in an arbitration, and is analogous to a judgment in a court of law...
- Bad faith
Bad faith is double mindedness or double heartedness in duplicity, fraud, or deception. It may involve intentional deceit of others, or self deception....
- Fine (penalty)
- Measure of Damages (under English law)
Damages for breach of contract is a common law remedy, available as of right. It is designed to compensate the victim for their actual loss as a result of the wrongdoer’s breach rather than to punish the wrongdoer...
- Non-economic damages caps
Non-economic damages caps are controversial tort reforms to limit damages for intangible harms such as severe pain, physical and emotional distress, disfigurement, loss of the enjoyment of life that an injury has caused, including sterility, physical impairment and loss of a loved one, etc...
- Restorative justice
Restorative justice is an approach to justice that focuses on the needs of victims, offenders, as well as the involved community, instead of satisfying abstract legal principles or punishing the offender...
Subrogation in its most common usage refers to circumstances in which an insurance company tries to recoup expenses for a claim it paid out when another party should have been responsible for paying at least a portion of that claim....