Template:Loss v damages

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