What types of damage/loss can be compensated and what is the measure of damages?
The function of damages under the Contract Act is primarily to compensate the aggrieved party for losses sustained by it owing to breach of contract. In India, law has categorised damages as 'direct damage' or 'indirect damage'; 'consequential damage' or 'remote damage' (the test is whether certain damage suffered by the aggrieved party was a foreseeable consequence of an act or omission on the part of the breaching party); and 'punitive or exemplary damage'. However, the Contract Act does not permit grant of 'indirect damages' or 'remote damages'.
Damages are further categorised as liquidated or unliquidated damages. Liquidated damages are such as have been agreed upon and fixed by the parties in anticipation of the breach whereas unliquidated damages are such that are required to be assessed. Applying the reasonableness test, the court can award any sum it considers reasonable provided that it does not exceed the sum previously agreed between the parties.
With regard to assessment of damages in contractual claims, Indian law imposes on the aggrieved party the duty of taking all reasonable steps to mitigate the loss consequent to the breach, and as discussed above, a court may deny an aggrieved party's claim to the extent that it finds that the aggrieved party has failed to take such steps.
Please refer to the answer to Question No. 8.
Turkish Code of Obligations has determined different types of contracts like sale contracts, rent contracts, exchange contracts, loan contracts etc. The damages caused by the defective product vary according to the provisions under these types of contract. In general, for B2B contracts provisions under types of contracts are taken as a basis in order to determine the damage. If the contract has been made with a consumer, the provisions are more detailed and in favor of the consumer according to the Law on Consumer’s Protection.
In principle, there is no statutory provision stating that there is a difference in the scope of damages for breach of contract and warranty liability, but many view that damage compensation based on breach of contract includes (i) expectation damages and (ii) special damages only to the extent that they were known or could have been known by the party responsible for the defective product, and the damage compensation based on warranty liability is limited to exchange value of the product and that no extended damages are recognized as warranty liability operates under the principle of strict liability.
In practice, it is common to bring a claim for both types of damages (i.e., damages for breach of warranty and damages for breach of contract). If a defect of the product is recognized, default on part of the seller/manufacturer is usually recognized as well, so the above discussion on the scope of damages is not particularly meaningful.
Damages for breach of contract are compensatory.
Not all damages or loss that flow from breach of contract will be recoverable. The common law has recognised that a party to a contract may be compensated by way of damages for:
- losses which flow naturally from the contract itself; and
- losses contemplated which would probably result from a breach or a particular breach
The types of damages/losses that can be compensated are as follows:
- Pecuniary damages/losses, for example loss of professional earnings;
- Material damages to property belonging to the claimant;
- Physical damages suffered by the claimant, such as bodily injury;
- Damages caused to the claimant’s mental integrity;
- Loss of opportunity to obtain a future benefit;
- Anxiety caused by the exposure to a defective product;
- Interest for delay in the performance of the contract.
The principle is a full compensation of the damages/losses suffered by the claimant, upon the condition that they be certain, direct and determined. In contract law, the damage must, in addition, have been foreseeable at the time of the performance of the contract.
The Brazilian law admits the compensation of material and moral damages. The material damages encompass everything that the consumer effectively lost plus everything that he was prevented from profiting. Such losses are measurable.
The moral damages, on the other hand, can be defined as psychological damages caused to the consumer. Due to its abstract nature, it cannot be monetarily measured. The judges commonly use other decisions previously rendered in similar cases to establish the parameters of the moral damages.
Punitive damages are not established in the Brazilian law, since our civil liability system is based in the concept that the victim shall be indemnified to the extent of the damages suffered, and shall not be cause of unlawful enrichment. Nonetheless one of the elements used by judges to fix the indemnification of moral damages is the pedagogical, which increases the amount of the condemnation.
In the event that a party breaches its contractual obligation, the Contract Law allows the non-breaching party to recover expectation damage. The principle of expectation damage is to compensate the non-breaching party, to the extent that the non-breaching party is restored to the economic position that it would have reached as if the contractual breach had not taken place. This covers the expense the non-breaching party incurred in the process of performing the contract, the damages that it paid to downstream purchasers, and the profit that it would have realized by, for instance, reselling the otherwise non-defective products.
Expectation damage is subject to expectability rule, meaning the loss suffered by the non-breaching party is not recoverable if it could not have been reasonably foreseen by the breaching party.
Contractual damages put the claimant in the position that he/she would have been in had the contract been performed correctly.
Remedies vary depending on the category of contractual term breached.
The claim for damages must be brought within six years of the breach of contract.
Someone who is liable for damages must restore the position that would exist if the circumstance obliging him to pay damages had not occurred. If a person has been injured and/or a thing has been damaged, the claimant may also demand the required monetary amount in lieu of restoration. Lost profits must also be compensated. To determine these, the normal course of events has to be considered as well as any special circumstances.
In Virginia, a plaintiff may recover compensatory damages for past, present, and future medical expenses; lost earnings; pain and suffering; impaired future earning capacity; and permanent disability as long as it can be proven to a reasonable degree of certainty. See, e.g., Hailes v. Gonzales, 207 Va. 612, 614 (1996). Proof with mathematical precision is not required; however, a plaintiff must provide sufficient evidence to support an intelligent and probable estimate of damages. Id. at 614. Punitive damages are recoverable if the plaintiff can prove the defendant’s conduct was wanton, willful, malicious, and/or evinces a conscious disregard of the rights of others. See Doe v. Isaacs, 265 Va. 531, 535 (2003). “[A]n award of compensatory damages . . . is an indispensable predicate for an award of punitive damages, except in actions for libel and slander.” Syed v. ZH Techs., Inc., 280 Va. 58, 74-75 (2010).
Claims for property damage and damages or compensation for personal injury caused by product liability may be raised.
The various claims are subject to various calculation rules. Liability for property damage is subject to no cap. In regard to personal injury, the Act on the Liability to Pay Compensation stipulates certain caps as to the amount of the claim for damages.
The Act contains a general mitigation rule which stipulates that damages may be reduced in respect of both property damage and personal injury in special circumstances.
The Products Liability Act applies only to personal injury and consumer property damage, whereas the scope of application of the product liability developed in case law is broader. The claimant is free to decide which set of rules to rely on.
Amongst the damages/losses described in section 2, practically all of them may be compensated within B2B relationship, should the causal link be proven by the claimant.
The same applies as in Q8 here.
Regarding contractual liabilities the injuring party is liable not only for his own conduct but also for those who act for him as vicarious agents. Also some contracts are seen as to protect third parties.