Damages and Kinds of Damages

Meaning of Damages

The term ‘’Damages’’ is not defined in Indian Contract Act, 1872. The literal meaning of the term ‘’Damages’’ means payment of money as compensation for loss or injury caused to one person by the wrongful act of another person.

Each parties to a contract is required to perform the obligations mentioned under the contract but if any party fails to do so and causes injury to the other party by non performance or performance of an action which he/she was not required to do, then that party has to compensate the other party for loss or damage caused to him.

Object of Damages

The object of awarding Damages is to place the victim in the same position as he/she was before the injury caused to him by the conduct or breach of contract by the other party. The main aim of awarding damages is to compensate the victim for violation of their rights by the other party rather than to make them gain money from it.

Types of Damages

1) General Damages

General or Ordinary Damages refers to those damages that are payable on loss caused/suffered naturally during the normal course of events from breach of contract. The main aim behind awarding General Damages is to compensate the aggrieved party and not to punish them. The quantum of General Damages will be exactly the amount which would place the victim in the same position as he/she was before the breach of contract.

Illustration: A entered into a contract to deliver 500 cans of blueberries to B who owns a bakery shop on a specified date. However, A fails to deliver the cans as mentioned in the contract. Here, B is entitled to receive General damages to as compensation for loss suffered due to breach of contract.

2) Special Damages

Special Damages refers to those damages that are payable when loss is caused due to unusual or special circumstances. Aggrieved parties receive special damages when they have experienced indirect loss due to breach of contract.

Illustration: A enters into a contract with B (a baker) to deliver 10 bags of flour on a date specified in the contract. However, A fails to deliver 10 bags of flour because of which B could not deliver cakes to birthday parties and suffered loss. Here, B is entitled to receive special damages for loss suffered due to non performance of contract by A.

3) Aggravated Damages

Aggravated Damages are damages that are payable to the victim when the defendant or surrounding increases the injury to the victim by subjecting them to humiliation, distress, embarrassment, false imprisonment, defamation etc. The aggravated Damages are compensatory in nature and awarded in case of aggravated damage caused to the plaintiff.

Illustration: X and Y were friends since childhood but after a few year X starts consuming drugs and in order to make him feel better, Y increases his dose of drugs which make ever sick. Here, X can claim Aggravated Damages.

4) Exemplary Damages

Exemplary Damages are also known as punitive damages are damages awarded by the court in circumstances where the court wants to make an ‘’example’’ and deter others from committing the same wrong.

Illustration: A and B were engaged and were about to get married but A later broke off the engagement and refused to marry B. B felt humiliated, suffered mental torture and wasted money on wedding preparation. Court held that B is entitled to receive both ordinary and special damages. It was also held that damages can not be measured by any fixed standard and mere paying damages is not enough but the defendant should also be punished in an exemplary manner for it.

5) Nominal Damages

Nominal Damages are compensation that is awarded to the victims when there is violation of their rights. Nominal Damages are awarded to the plaintiff if their legal rights have been infringed even though they have not suffered any loss or injury.

Illustration: Sam enters into a contract with Peter to sell his watch at 1000 bucks on a specified date. Later he refuses to buy the watch. Sam then sells his watch to Mary at the said price. Here, even though Sam did not suffer any loss due to breach of contract by the conduct of Peter still he can claim Nominal Damages as his legal rights were violated by non performance of contract by Peter.

6) Pecuniary Damages

Pecuniary Damages are damages that are quantifiable in nature. These can be measured in financial terms. They are mostly common in civil lawsuits. Some examples of Pecuniary Damages are medical bills, wage replacement, loss of earning capacity, future care, cost of physical damage etc.

Illustration: A’s mother fell severely ill and had to be admitted to hospital immediately for treatment. A could not meet the cost of treatment for his mother so he approached B and asked for some money for his mother’s treatment. B agreed to give him money for treatment on a promise that he will return the money after 6 months. A fails to return money to B. Here, B will be entitled to receive Pecuniary Damages and the amount would be calculated from medical bills.

7) Non Pecuniary Damages

Non Pecuniary Damages are damages that are not quantifiable in nature. These cannot be measured in financial terms or it is difficult to measure it in monetary terms because of its subjective nature. Some examples of Non Pecuniary Damages are Pain, suffering, distress, impairment of life, Physical and mental impairment, impairment of relationship, loss of future wages etc.

Illustration: A and B went out on a drive and met with an accident. A was driving the car carelessly. Both A and B were severely injured but B lost limbs in the accident . Here, B can claim Non Pecuniary Damages from A for his negligent driving which lead to her physical impairment.

8) Compensatory Damages

Compensatory Damages are payable to the plaintiff by civil court to compensate for damages, injury or other losses as a result of negligence or unlawful action of another party.

Illustration: A and B were neighbours. A had a small vegetable garden at the front of the house. B grew vegetables for commercial purposes. One day B’s dog enters into A’s vegetable garden and destroys all his vegetables in his garden because of which he suffered huge loss. B then moves to the court to claim compensatory damages. Civil Court held A liable to pay Compensatory Damages to B.

9) Non compensatory Damages

Non Compensatory Damages are damages awarded by the court of competent jurisdiction that are penal in nature.

Illustration: A induces B to kill himself by constantly reminding him that he is worthless and that he should die. B eventually commits suicide. Here, A will not only be punished for abetment of suicide but will also be liable to pay (Non Compensatory Damages) to B.

10) Liquidated Damages

Liquidated Damages are Damages wherein the parties to contract have decided beforehand to pay a certain amount on breach of contract.

Illustration: Marry enters into a contract to sell her house to Trinity at agreed price and on specified time. The also mentioned in the contract that if any party breaches the contract, then that party will pay compensation amount of 800$ to the aggrieved party. This amount of 800$ is liquidated damages.

11) Unliquidated Damages

Unliquidated Damages are Damages are those damages that are decided by the court after assessing the loss and injury suffered by the party due to breach of contract.

Illustration: A gives his house on rent to B in return of 12000/- per month as rent amount. After a few years, B refuses to pay the rent amount as specified in the contract. A moves to the court to claim his rent amount. Here, the court may assess the loss or injury suffered by him and can decide the compensation amount as it may fit deemed.

References
https://accountlearning.com/types-of-damages-for-breach-of-contract-with-examples/
https://indiancaselaws.wordpress.com/2017/01/12/damages-under-indian-contract-act-1872/
https://blog.ipleaders.in/types-damages-section-73-indian-contract-act-1872/
https://www.allinjurieslawfirm.com/blog/the-difference-between-pecuniary-and-non-pecuniary-compensatory-losses
https://diamondlaw.ca/blog/what-are-pecuniary-and-non-pecuniary-damages