Damages the Law of Damages

Damages

The law of damages is an attempt to establish a standard for measuring any potential monetary award for awarding those meriting compensation for their loss or injuries. There are essentially two primary classifications of damages under the law: tort and contract.

The purpose of contract damages is to place the injured party in substantially the same position as he would have been if the contract had been performed. In determining contract damages the injured party is entitled to recover profits that he would have received or, in the event that he cannot prove profits, he may recover expenditures made in reliance on the contract. All contract damages must have been within the reasonable contemplation of the parties at the time that the contract was made. In most circumstances, an injured party to a contract may not recover consequential damages for mental anguish.

Tort damages are similar to contract damages in that they also attempt to place the injured party in substantially the same position as he occupied prior to the injury. Tort damages are of two general types: general and special. General damages are those that naturally flow from the defendant's wrongful act and include medical expenses and lost wages among others. General damages do not need to be specifically pled but the second type of damages -- special damages -- must be specifically pled in the injured party's complaint. Special damages are losses that cannot be presumed or estimated because they are unique or special to the plaintiff's situation.

II. Equitable Remedies

Under British common law legal and equitable remedies were handled by different types of courts but in the United States this distinction was never made. Instead, the courts were permitted to handle both remedies. Equitable remedies are those that require that a defendant perform or refrain from doing a particular action. Such remedies are discretionary with the court and highly flexible to the situation. The essence of all remedies based in equity is to maintain a state of fairness between the parties. All equitable actions are determined by a judge. There is no right to a jury trial.

In tort cases, a court must balance the equities. In doing so, the granting of an injunction must not place any undue hardship on the defendant and the feasibility of enforcing the injunction must be considered. Injunctive relief in tort cases is extremely rare. Equitable relief in contract actions is far more common. The usual relief sought is specific performance and in order for the court to consider granting such relief the requesting party must demonstrate that the terms of the contract are sufficiently certain, that said party has complied with all conditions precedent to require defendant's performance, that enforcement of the contract is equitable, and that such enforcement is feasible.

III. Restitution

The remedy of restitution is based essentially on the concept of unjust enrichment, that is, it is a determination that it would be unfair for the defendant to benefit from retaining whatever he has received. Like all remedies, the purpose of restitution is to return the parties to the status quo by requiring that the defendant return specific property or by awarding an injured party a sum of money equivalent to the value of the defendant's benefit.

At common law, restitution arose from actions between parties that created implied contracts. These quasi-contracts were based upon the conduct of the parties and equity relief was created to avoid any party benefiting unjustly. Over time other equitable remedies have developed in the form of restitution to avoid other inequitable situations to develop. These remedies include constructive trusts that involve a defendant being required to transfer title to a plaintiff. In a constructive trust the defendant must have legal title to the property but his continued retention would result in an unjust enrichment and there is no other available remedy at law that can resolve the situation. There is also the creation of an equitable lien where it can be shown that a defendant land owner has benefited unjustly. The equitable lien affords the injured party the opportunity to enforce the unjust enrichment. The lien is enforceable by foreclosure and sale. A prior sale to a bona fide purchaser, however, cuts of the enforcement of an equitable lien. Two other forms of restitution remedies are subrogation and accounting for gains.

IV. Injuries to Tangible Property Interests

Injuries to tangible property interests include those to property rights, personal rights, and the misappropriation of money. As to the misappropriation of money, the injured party has a number of available remedies which include constructive trusts, equitable liens. In the case of commingled funds aggrieved parties are entitled to the full value of such funds and any property purchased through the use of such funds. Where more than one party has been aggrieved, the parties are entitled to a pro rata interest in any funds available to the aggrieved.

Injuries to personal property vary as do the available remedies. The remedies available differ based upon the nature of the personal property being affected. When personal property is destroyed, the measure of damages is the value of the property at the time of destruction, less salvage value, plus interest. The plaintiff's loss of use cannot usually be recovered. When personal property is merely damaged, the measure of damages is either the difference in value of the property before and after the harm or the reasonable cost of the repair plus loss of use. Loss of use is measured by the rental value of substitute property. Finally, the tortious taking and retention of personal property affords plaintiffs with a variety of remedies including self-help, replevin, and injunction. Plaintiffs may also request monetary relief from the court or equitable relief such as constructive trust or equitable lien.

There are a variety of injuries to real property that also may demand equitable and/or legal relief. These situations include tortious destruction or injury to the property, waste, trespass, encroachment, and nuisances. In all cases, all traditional remedies such as injunctive relief and specific performance are available.

V. Injuries to Business and Commercial Interests

All businesses are subject to tortious and contractual damages. The causes of such injuries vary but the measure of damages is determined by the nature of the damage. In the case of total destruction of a business the owners are entitled to a choice of remedies. They may choose to pursue recovery based on a projection of profits over the probable lifetime of the business. Alternatively, the owners may recover the market value of the business at the time the business was destroyed. In the case of a partial destruction, the business may sue for the diminution of the market value, the loss of profits, or a share of the market sales. In the event that malice can be shown, punitive damages may be recoverable. Finally, in the case of a new business that has not established a track record of profits the measurement of damages presents a unique and difficult problem. In such case, a recovery for lost profits is rarely allowed.

A problem unique to the business world is tortious interference with contractual relations. In such cases damages may be recoverable if the plaintiff is able to prove actual damages. In some states the plaintiff is able to recover not only for losses incurred as a result of the contract breach but also may recover for mental anguish and loss of reputation. In a minority of jurisdictions plaintiffs are entitled to recover only for provable contractual damages.

Due to the unique nature of business relationships, damages are also recoverable for actions involving the unlawful dissemination of trade secrets, patent infringement, and illegal use of copyrighted material. In all such cases the business can recover not only lost profits but also, in the most serious of cases, consequential and punitive damages are also recoverable.

VI. Injuries to Personal Dignity and Related Interests

Certain individual personal rights are afforded special consideration. These personal rights such as reputation, privacy, and interpersonal relationships are considered important and damages for infringement of these relationships can be quite extensive. For instance, in cases involving defamation, either libel or slander, pecuniary loss is not ordinarily required. The mere demonstration that defamation has occurred is sufficient and is actionable per se. In the case of public officials and public figures, however, there must be a demonstration of actual malice in order for a defamation action to be successful while in the case of a private citizen a mere showing of negligence is sufficient. Damages in such actions include not only general damages but also special damages. Damages can in such actions are presumed but the plaintiff's reputation, his standing in the community, the extent of the defamatory statement, and its effect are all considerations in determining damages. Other private rights provided special protection and collateral damages in the event that such rights are violated include family relationships, rights of association, civil and political rights, and religious status.

VII. Personal Injury and Death

Although often criticized and the subject of much political debate the only effective remedy available for those injured as a result of tortious behavior is an award of compensatory damages. Under tort law, injured parties are entitled to compensatory damages which include both general damages for pain and suffering and disfigurement and special damages which include payment for loss of past and future earnings and past and future medical expenses. The awarding of compensatory damages is totally within the discretion of the jury. Under the common law, the plaintiff is entitled to a single lump sum payment. Some states have begun to limit the amount that plaintiffs can receive as a result of a personal injury or wrongful death due to the present political unpopularity of personal injury actions.

Other affected by the losses caused by personal injury actions are also entitled to seek recovery. Some examples of such individuals include spouses, children, employers of the injured party. The damages available for such individuals vary depending on the circumstances of the relationships and how the relationship is affected.

VIII. Fraud

The available remedies for fraud include rescission of the contract and restitution or affirmance of the contract and an awarding of damages. The plaintiff must choose his remedy prior to judgment. Damages are available in law, both general and special. Punitive damages, however, must be specifically pled.

IX. Duress, Undue Influence, and Unconscionable Conduct

All three of these causes of action are related to the relationship between the parties and how such relationship affected their business dealings. The remedy in all three causes of action is dependent on the nature of the influence and depth of such influence. Rescission of any agreement between the parties is generally part of the remedy.

X. Mistake

Mistakes occur in a variety of relationships and all are not necessarily compensable. In those relationships which rise to the level of demanding legal intervention the only remedies available are based in restitution. When mistakes are made relative to the integration of certain terms in an agreement or transaction, reforming the mistaken terms is an available remedy as well.

XI. Remedies for Breach of Contract

Actions involving the sale of land are numerous in the legal field. Such transactions provide a great number of opportunities for disputes to occur and, therefore, it is not surprising that such disputes have given rise to a significant number of legal distinctions. The remedies available for parties in land sale contracts vary depending on where in the sales process the alleged breach has occurred. In such transactions, the nature of the remedies available range from general damages, specific performance, rescission and restitution.

Other than land sales contracts disputes arise in other contract relationships. These other contracts, such as building contracts, personal service contracts, and the sale of goods are all dependent on the circumstances surrounding their formation and execution. The remedies available depend on the specifics of the individual contracts but, in most cases, the full range of remedies is available.

XII. Remedies in Connection with Enforceable Contracts

Often parties may be limited in their available remedies due to problems in either the formalities surrounding the formation of a contract such as compliance with the Statue of Frauds or some similar provision or there was never any legally recognized agreement between the parties. In such situations, the parties may be required to rely upon equity as their only available form of redress. The full range of equitable remedies are generally available.

Remedies

The development of remedies has paralleled the development of the common law. When disputes arise between parties it is only natural that a remedy of some fashion is designed that satisfies the relative interests. From this beginning the law of remedies has developed.

Over the course of time the availability of legal remedies has greatly expanded in proportion to the growth in legal rights. When the British common law system first began the number of recognized legal rights was minimal but as society has begun to recognize more and more legal rights the availability of remedies for perceived violations of those rights has also expanded.

The law or remedies involves a determination of the form and type of relief that is available to litigants in the courts. There are a variety of legal remedies available to parties and most of these remedies can be classified based upon their particular function. In essence, there are three general remedies available: general, restitution, and specific. Under each type of remedy there are additional classifications.

General damages include compensatory damages, nominal damages and punitive damages. The remedy available to the parties is dependent upon the circumstances of each case. Compensatory damages are intended to either make the intended party whole as in the case of tort cases, or to ensure that the parties to a contract are provided with what they have lost as a result of the breach. Nominal damages, on the other hand, are received when no real loss has occurred or cannot be calculated and are awarded when a personal right has been violated. Punitive damages are awarded in addition to compensatory and nominal damages when the behavior causing the injury is so willful, wanton, or malicious as to merit an additional award. The purpose of punitive damages is to punish the defendant in an effort to discourage repetition of the conduct.

In addition to general damages parties can also seek a remedy known as restitution. The concept behind restitution is to restore to the plaintiff any benefit that the defendant may have received. Restitution may involve the return of money or property. Finally, in certain types of litigation, the parties may request that certain behaviors be either prohibited or required through the intervention of the courts. These remedies identified as specific performance, injunction, or declaratory relief are known as equitable remedies and can only be granted by a judge.