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Damages and liquidated claims

Damages are available following a breach of contract as a matter of right. The other remedies that may be available following contractual breach are for debt or liquidated damages.

Damages

Damages for breach of contract are viewed as a 'substitute' for performance - consequently, they are designed to put the plaintiff in the position they would have been in had the contract been performed properly. Punitive damages are not available. The loss claimed must not be too remote from the breach and the non-breaching party must do what is reasonable to reduce (mitigate) the damage they suffer.

  • Damages are available for mental distress in some circumstances: see Baltic Shipping

NB: damages might also be available for certain pre-contractual conduct (misleading conduct, duress etc - in other areas, such as tort or pursuant to statute - here we are focussing on damages for contractual breach)

Liquidated damages

Liquidated damages will be available where a clause int he contract between the parties provides that a particular sum of money will be payable upon breach; provided that the sum specified does not constitute a 'penalty', the non-breaching party may sue for this 'liquidated' sum rather than for unliquidated damages.

Debt

A debt is quite different from damages (liquidated or otherwise) in that it involves a claim for a sum of money due under the contract - it is, therefore, a liquidated sum, but is not in the form of a substitutory remedy but is a claim for a specified monetary amount owed under the contract.

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