A frequent issue in contract disputes is whether a non-breaching party can recover consequential damages arising from a breach of contract. Of course, in a contract action, whenever a plaintiff requests damages, those damages must be a consequence of a contract breach.
However, consequential damages are typically those damages that are unforeseeable, remote, and beyond the contemplation of the breaching party. Therefore, these damages are often not recoverable in Ohio breach of contract claims.
In this post, the Bensinger Legal Services team will explain the basic types of contractual damages. We will also discuss when and whether a non-breaching party can obtain consequential damages in Ohio.
Types of Damages in Breach of Contract Claims
In Ohio, the types of damages that a plaintiff can request when a contract is breached usually fall into one of four categories: actual, general, punitive, and consequential. We will provide a brief overview of the types of damages a plaintiff can receive and then focus on consequential damages since this is a complex topic that prospective litigants often have a lot of questions about.
Actual damages are also known as compensatory or specific damages. These damages are awarded to compensate an individual for their actual losses when a contract is breached.
General damages can encompass a range of different types of non-economic losses, including pain and suffering, emotional distress, loss of enjoyment, loss of consortium, loss of reputation, and similar types of harm.
The types of non-economic damages that fall under the category of general damages can vary. Depending on your type of case, you may even face a cap on the amount you can receive in non-economic damages in Ohio.
These damages are sometimes awarded when the defendant has exhibited particularly bad behavior or has engaged in repeated violations of a contract or law. They also serve to deter both the bad actor and others from engaging in the bad conduct. Ohio places certain restrictions on the award of punitive—also called exemplary—damages, since the goal of these awards is to deter future bad conduct and not to destroy a person’s reputation or livelihood.
Consequential damages are a type of compensatory damages that arise as a result of the breach but are not directly caused by it. These damages are typically associated with losses that were reasonably foreseeable by the breaching party at the time the contract was entered into.
What Are Consequential Damages?
Consequential damages can include lost business opportunities, reputational harm, or additional expenses incurred as a result of the breach. They go above and beyond the cost of simply replacing a lost order.
When a vendor breaches a contract with a toy store and fails to ship boxes of the season’s hottest toy in time for the holidays, the toy store suffers not only actual damages from the failure to deliver the goods, but the lost business opportunities to mark the toy up at a holiday premium. They might also suffer reputational harm if the toy was advertised as being “exclusive” to that store for the season. Finally, the toy store may even have additional expenses in sourcing a new vendor to deliver the toy in time to capture at least some holiday sales.
Examples of Consequential Damages
For example, suppose a painter breaches a contract by not finishing a job, causing a homeowner to delay putting their house on the market and finding a more expensive vendor to finish the job. Is the painter liable if the house sells for a lower price because the listing was delayed?
Suppose the homeowner were to be awarded consequential damages. In that case, a court might award them the difference between the assessed value of their home on June 1 (the date the house would have been listed if the painter had finished) and the home’s value on July 1 (the date the home was actually listed). In theory, this change in value could be hundreds of thousands of dollars — far more than the $1000 worth of goods and services that the painter failed to deliver by not finishing the painting work.
Another way to view the issue of consequential damages is that consequential damages are often much more significant when it comes to the amounts awarded than other types of damages.
How Bensinger Legal Services Can Help
At Bensinger Legal Services, we understand how to handle claims for damages. Our team is led by Aaron Bensinger, an Ohio attorney serving personal injury and civil litigation clients. He has extensive trial experience and makes client service his primary focus. Aaron’s practice serves the entire Northwest region of the state and beyond.
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