Special Damages: Everything You Need to Know
Special damages are awarded in a contract lawsuit to cover losses due to a breach of contract. 3 min read
Special damages are awarded in a contract lawsuit to cover losses due to a breach of contract. Generally, they must be requested prior to the beginning of the trial because they concern losses that weren't the direct result of the contract breach. Special damages don't just relate to losses incurred under the contract. They can also include things such as loss of business reputation and loss of profits.
Special Damages Versus General Damages
As part of a contract suit, general damages are contractual losses, including losses resulting from the withholding of money or the difference between contract prices and market rates.
In contrast, special damages, also sometimes called consequential damages, might not have been directly triggered by the contractual breach. A plaintiff can claim them in addition to general damages. They may include things like:
- Loss of operating revenue due to a delay in construction
- Harm to a company's business reputation
- Loss of time
In a case involving loss of profit, for example, a dealer in precious stones may have expected to buy an item from a seller for $10,000 before selling it for $11,000. If the seller broke the contract and sold the item to another businessman, the dealer could sue for special damages. The special damages claim would be $1,000, which would cover the profit he expected to make from the item.
Claiming Special Damages in a Contract Suit
It can often be difficult to secure special damages in a contract suit because issues of causation and foreseeability must be investigated. Special damages aren't generally part of the majority of contract cases. As a result, a party can sometimes lose their right to claim these damages if they fail to state that they want to claim special damages prior to the trial.
Requirements for Securing Special Damages
In determining whether special damages should be awarded, a court will take the following issues into account:
- Were the losses reasonably foreseeable when the contract was agreed?
- Is there a causal connection between the losses and the contractual breach?
- Are the losses calculable?
Some contracts relate to matters where losses are hard to quantify. These contracts often contain a condition requiring one of the parties to give up their right to sue for special damages. Certain jurisdictions also only allow special damages claims if the losses suffered were unavoidable.
Special Damages in Other Contexts
The legal term "special damages" has a different meaning in contract claims than it does in tort claims. In a tort claim, special damages refer to losses that can be calculated precisely, while general damages are losses that are hard to quantify. This is almost the exact opposite of how the terms are used in a lawsuit related to a breach of contract.
Things are made even more confusing by the fact that many contract claims also include tort issues. The decision to present an action as a tort or contract breach can impact the total damages that a plaintiff can secure.
Special Damages and General Damages in Tort Claims
In a tort claim, special damages and general damages are both part of the broader category of compensatory damages, which aim to reimburse the plaintiff for losses or damage. In this context, special damages and general damages may also be referred to as economic and non-economic damages, respectively.
Special damages are calculated at market value prices at the time of the loss. In a tort claim, attorneys may try to secure special damages to cover items, such as:
- Medical expenses
- Replacement or repair of damaged property
- Loss of wages and ability to earn income
- Loss of items that can't be replaced
In the context of a tort claim, the term "general damages" takes on another meaning. It concerns losses that are difficult to determine, such as:
- Physical disfigurement
- Loss of companionship
- Lower quality of life
- Mental distress
To help put a cost on these factors, the plaintiff may call on expert witnesses to offer testimony. General Damage costs can vary depending on the plaintiff. As a result, general damages awards in tort claims can be different even if the circumstances of the cases are similar.
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