Nominal damages are awarded to a plaintiff in a case where the court decides that the plaintiff suffered a legal wrong but no real financial loss. By issuing such a ruling, the court recognizes that the defendant has breached the plaintiff's rights.

Although awards can vary depending on the case, a successful nominal damages claim usually results in the awarding of a token sum of $1. Some courts also include the cost of the lawsuit in the total nominal damages.

What Are Damages?

In tort cases, plaintiffs who have experienced injury, property damage, pain, or other losses resulting from the defendant's actions usually seek damages. However, to secure financial compensation, the plaintiff must present evidence to prove the loss. If the court decides that the evidence is convincing, it will award damages to the plaintiff.

Before damages can be awarded to a plaintiff in a civil case, the court must determine the dollar amount involved, which in legal terms is called the "actual damages." For example, Mike and Catherine had a contract worth $2,000, but Mike violated the contract. Catherine lost $2,000 as a result and can therefore seek $2,000 in actual damages.

Why Pursue a Nominal Damages Claim?

Courts will only hear cases from plaintiffs who believe they have experienced a legal wrong and are seeking some form of compensation. However, if the plaintiff can't prove the loss they incurred or the loss cannot be measured, they can still seek compensation by suing for nominal damages.

Due to the nature of some cases, there may be no actual damages or the amount may be extremely small. Additionally, if a plaintiff cannot present evidence to prove a legal wrongdoing on the defendant's part, the plaintiff has the option of seeking nominal damages.

Some of the main reasons why an individual may pursue a nominal damages claim include:

  • To prove that they were right
  • To enable the plaintiff to seek punitive damages against the defendant
  • To stand up for an important issue, such as the breaching of constitutional rights

An example of a case involving civil rights could be a woman who accuses a defendant of violating her right to freedom of speech. The court might rule in her favor, but since she experienced no financial loss, she would not receive nominal damages.

Although small sums of money are involved, nominal damages can have a big impact, such as the 1985 case between the United States Football League and the National Football League. The United States Football League won the case, and the court awarded the organization $1. The United States Football League ultimately received $3 because the antitrust laws used in the case automatically triple any damages awarded.

Contract Claims and Nominal Damages

The awarding of nominal damages in a contract claim is not very common. This is because these cases tend to include financial losses if a legal wrong has occurred. Other types of damages are awarded more frequently, including compensatory damages, liquidation damages, punitive damages, and restitution.

However, there are times when nominal damages can be crucial to a contract case. These may include:

  • Cases in which property values cannot be calculated
  • Cases involving both a contract claim and tort claim, which are referred to as mixed lawsuits
  • Cases in which the court finds the defendant has lied or deceived the plaintiff

Imagine that plaintiff A sues defendant B because the defendant failed to provide the insurance that was promised in a contract. Plaintiff A made alternative arrangements to guarantee that they were insured. The court could rule in favor of plaintiff A but would probably only award nominal damages because plaintiff A suffered no losses due to defendant B's actions.

Legal Fees

In some states, courts can include the costs of the lawsuit when awarding nominal damages. This is in spite of the fact that the Supreme Court ruled in a 1992 case that including legal fees may be unconstitutional due to the vast difference in cost between attorney fees and the token $1 usually awarded to the plaintiff. Some states use this decision to avoid including lawsuit costs as part of an award for nominal damages.

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