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Understanding The Concept Of Nominal Damages In Breach Of Contract

When you sue for breach of contract, you may be awarded different damages, such as compensatory, punitive, restitution, and nominal. Most of these are fairly easy to understand, but the concept of nominal damages isn't easy to understand.     

What It Is

You are awarded this damage if a signatory breaches a contract, but the breach doesn't cause you any substantial loss or injury. In essence, it is the court's way of recognizing that you have been wronged. Since it recognizes the absence or loss of injury, nominal damages is ordinarily awarded in the form of trifling sums of money; don't be surprised if it is just a dollar. 

What You Need To Prove

To be awarded other damages, you need to prove that a contract existed, one of the signatories has breached it, and the breach has caused you some injury or damage. In the case of nominal damages, however, you just need to prove that a signatory has breached a valid contract. Whether or not the breach has resulted in damage or injury is immaterial to the case. 

Examples of Cases Where it Might Be Awarded

Suppose that you have signed a contract with a farmer to supply you with oranges at the rate of $1 per pound. Suppose that when the oranges are ready for harvest, the farmer finds better prices elsewhere and reneges on the contract. However, on the same day, you are lucky enough find another supplier to sell you the same amount of oranges you wanted at the same price. 

In this case, it's clear that you had a contract with the first farmer, and he or she has breached it. However, you haven't suffered any loss or injury because you have found an alternative source of the fruits. If the oranges (from the second farmer) are of comparable quality to the ones you missed out on, then all the court may award you for the breach of contract is nominal damages. 

Why Bother With It?

The monetary rewards of nominal damages may be insignificant, but the recognition of the damage itself is not. One of its main benefits is that it paves the way for you to make other claims. For example, if you have been awarded nominal damages, then it paves the way for the defendant's punishment. This is useful because it makes him or her (and others who may find themselves in a similar situation) think twice before breaching contracts. You may also be awarded punitive damages. 

For further assistance, contact a professional in business law, such as Robert L Lilley Co Lpa.