If you suffer loss because of a breach of contract the Court may award damages to compensate you for that loss.
In general it is not necessary to terminate a contract in order to claim damages.
However to recover more than nominal damages, you must have been ready and willing to perform the contract yourself.
Damages for expectation losses
Unless the contract itself contains provisions which deal with damages payable for breach of contract, damages for breach of contract are awarded on the principle that you are to be put in the same position, so far as money can do it, as if the contract had been performed.
To put it the other way, you cannot be put in a better position than if the contract had been performed.
This kind of damages protects the expectation of performance of the contract.
A comparison will be made between the hypothetical benefits that would have been received had the contract been performed, and the benefits (if any) that were actually received.
Damages are awarded for that loss, unless the loss is too ‘remote’, or reasonable steps could have been taken to prevent that loss.
Loss will not be too ‘remote’ if, judged at the time the contract was made, it was sufficiently likely that a breach of contract would lead to the loss in question, or that kind of loss.
Damages will be awarded if the breach of contract materially caused or contributed to the loss. It is not necessary for the breach of contract to be the sole or dominant cause of the loss.
However damages will not be awarded if the loss was actually caused by some supervening event, after the breach of contract.
Damages for loss of chance or opportunity
Damages can be awarded for loss of a chance or opportunity to profit or gain.
Provided the existence of the chance can be proved, it is not necessary to also prove that the chance would probably have led to profit.
Even a chance of profit that is less than 50% is compensable, but the assessment of damages will take into account the probability of the profit being realised. So a speculative chance (of, say, less than 1%) may not be compensable at all.
Damages for reliance loss
Damages can also be awarded to compensate for wasted expenditure, caused by a breach of contract, provided such expenditure would have been recouped had the contract been performed.
For example, expenditure reasonably incurred prior to entry into the contract, during the contract, and in exiting the contract.
Please contact me if you require assistance.
Greg Carter is a freelance litigation lawyer based in Perth, specialising in fixed-fee commercial dispute resolution.
Greg offers a free consultation and a ‘no obligation’ quotation.
For more information please call Greg on 0422 406 929 or email firstname.lastname@example.org.
Or see his website www.gregcarter.com.au.