Template:Loss v damages: Difference between revisions

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Quick reminder: in the law of [[contract]] “losses” and “damages are” different, though related things.  
Quick reminder: in the law of [[contract]] “losses” and “damages are” different, though related things.  


''[[Losses]]'' are pecuniary misfortunes that you might suffer as a result of a breach of contract. They can be divided into ''direct'' losses and ''indirect'', or ''consequential'' losses.
'''[[Losses]]''' are pecuniary misfortunes that you might suffer as a result of a breach of contract. They can be divided into:
:“'''Direct'''losses, that are the natural and foreseeable consequence of breach of contract.
:“'''Indirect'''or “'''consequential'''” losses, which are a more speculative nature.
Note that “'''[[loss of profit]]'''” and “'''[[loss of opportunity]]'''” are not judicially recognised categories of loss: they can be either ''direct'' — for example, foregone [[interest]] on a defaulted payment — or ''indirect'' — the winnings you would have got from putting that defaulted payment on a rank outsider who came good in the 2:35 at Kempton — but if in doubt (i.e., not a natural consequence of the breach) assume they will be indirect


''[[Damages]]'' are the amounts a court orders a naughty counterparty to pay to an innocent one as ''compensation'' for its loss. They may, or may not, be the same amount as the actual losses suffered.
'''[[Damages]]''' are the amounts a court orders a naughty counterparty to pay to an innocent to ''compensate'' for its loss of bargain (in a contract) or ''atone for its wrongdoing'' (in a [[tort]] or [[breach of trust]]). They may, or may not, be the same amount as the actual losses suffered:


Damages may be ''general'', if they compensate for direct losses, or special, if they relate to indirect losses. (There are also [[Exemplary damages|“punitive”, or “exemplary” damages]], but ''these are not available under English law for breach of contract''.
:“'''[[General damages|General]]'''” damages compensate for [[direct loss|direct losses]].
 
:“'''[[Special damages|Special]]'''” damages relate to [[indirect loss|indirect losses]]. They are rare in contracts, even when not specifically excluded which, in finance contracts, they usually will be.
[[Special damages]], as compensation for [[indirect loss|indirect losses]], are extremely rare in contract — when they are not ruled out explicitly which, in the world of finance, they usually are.
:[[Exemplary damages|“'''Punitive'''” or “'''exemplary'''”]] damages do not compenstate for loss at all, but rather punish a wrongdoer for outrageous behaviour. These are not available under English contract law but may be awarded — extremely rarely — in tort or for breach of [[trust]].
:There is also an “'''[[Account for profit]]'''”: an order to hand over profits made through the misuse of someone else’s physical or intellectual property. This remedy is ''not'' available for a simple breach of contract.


{| class="wikitable"
{| class="wikitable"
|+ Losses and remedies, charted
|+ Grievances and remedies, charted
{{aligntop}}
{{aligntop}}
! Loss !! Remedy
! Grievance !! Remedy || Contract || Tort || Fiduciary
{{aligntop}}
{{aligntop}}
| [[Direct loss]] || [[Contractual damages|General damages]]  
| [[Direct loss]] || [[Contractual damages|General damages]] || Yes || Yes ||Yes
{{aligntop}}
{{aligntop}}
| [[Consequential loss]]|| [[Special damages]]  
| [[Consequential loss|Indirect/consequential loss]]|| [[Special damages]] || Usually No || Usually No||Usually No
{{aligntop}}
{{aligntop}}
| [[Egregious wrongdoing]]|| [[Exemplary damages]] (potentially available in tort and breach of fiduciary duty; not in contract)
| [[Egregious wrongdoing]] || [[Exemplary damages|Exemplary/punitive damages]] || No|| Yes ||Possibly
{{aligntop}}
{{aligntop}}
|[[Breach of trust]] or [[misuse of property]]|| [[Contractual damages|General damages]] ''and'' [[account for profit]]
|Profiting at owner’s expense|| [[Account for profit]] ||No ||Yes || Yes
{{aligntop}}
 
|}
|}

Latest revision as of 16:57, 30 September 2023

Quick reminder: in the law of contract “losses” and “damages are” different, though related things.

Losses are pecuniary misfortunes that you might suffer as a result of a breach of contract. They can be divided into:

Direct” losses, that are the natural and foreseeable consequence of breach of contract.
Indirect” or “consequential” losses, which are a more speculative nature.

Note that “loss of profit” and “loss of opportunity” are not judicially recognised categories of loss: they can be either direct — for example, foregone interest on a defaulted payment — or indirect — the winnings you would have got from putting that defaulted payment on a rank outsider who came good in the 2:35 at Kempton — but if in doubt (i.e., not a natural consequence of the breach) assume they will be indirect

Damages are the amounts a court orders a naughty counterparty to pay to an innocent to compensate for its loss of bargain (in a contract) or atone for its wrongdoing (in a tort or breach of trust). They may, or may not, be the same amount as the actual losses suffered:

General” damages compensate for direct losses.
Special” damages relate to indirect losses. They are rare in contracts, even when not specifically excluded which, in finance contracts, they usually will be.
Punitive” or “exemplary damages do not compenstate for loss at all, but rather punish a wrongdoer for outrageous behaviour. These are not available under English contract law but may be awarded — extremely rarely — in tort or for breach of trust.
There is also an “Account for profit”: an order to hand over profits made through the misuse of someone else’s physical or intellectual property. This remedy is not available for a simple breach of contract.
Grievances and remedies, charted
Grievance Remedy Contract Tort Fiduciary
Direct loss General damages Yes Yes Yes
Indirect/consequential loss Special damages Usually No Usually No Usually No
Egregious wrongdoing Exemplary/punitive damages No Yes Possibly
Profiting at owner’s expense Account for profit No Yes Yes