Template:Loss v damages: Difference between revisions

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:“'''Direct'''” losses, that are the natural and foreseeable consequence of breach of contract.
:“'''Direct'''” losses, that are the natural and foreseeable consequence of breach of contract.
:“'''Indirect'''” or “'''consequential'''” losses, which are a more speculative nature.
:“'''Indirect'''” or “'''consequential'''” losses, which are a more speculative nature.
:“'''[[Account for profit]]'''”, which is an order than a wrongdoer hands over actual profits from a breach of duty to a property owner. These are available in trust and agency scenarios, and for misuse of physical or intellectual property, but are ''not'' a remedy for breach of contract.
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
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 may be:
'''[[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|General]]'''” damages, if they compensate for [[direct loss|direct losses]].  
:“'''[[General damages|General]]'''” damages compensate for [[direct loss|direct losses]].  
:“'''[[Special damages|Special]]'''” damages, if they relate to [[indirect loss|indirect losses]]. Awards of [[special damages]] are rare in contract cases, even when they are not specifically excluded by contract which, in the world of finance, they usually are.
:“'''[[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.
:[[Exemplary damages|“'''Punitive'''” or “'''exemplary'''”]] damages, that do not compenstate for loss at all, but rather punish a wrongdoer for outrageous behaviour. These are not available under English law for breach of contract, but may be awarded — extremely rarely — in cases of tort, or breach of [[trust]].  
:[[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.


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Revision as of 16:46, 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.
Losses and remedies, charted
Loss Remedy
Direct loss General damages
Indirect/consequential loss Special damages
No actual loss, but egregious wrongdoing all the same Exemplary/punitive damages (potentially available in tort and breach of fiduciary duty; not in contract)
Breach of trust or misuse of property General damages and account for profit
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