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What are compensatory damages after a contract breach?

A breach of contract can be frustrating and expensive; for business owners, it can also have a ripple effect as it makes it impossible to fill orders, business is lost and the company's reputation suffers.

To make up for it, many people seek out compensatory damages after the breach. In fact, legal experts note that these damages are the single most common legal remedy that is sought. They help to even things out so that the job still gets done and does not cost the person any more than they originally intended and expected to pay. They still get what the contract promised, though other sources may be more expensive.

For instance, maybe you're a business owner and you needed to add an addition onto a store for a new product line. You hired a contractor to do the job for $80,000, which you then paid up front. You expected the job to start the following week.

The contractor never showed up. After a month of trying to get in touch with the company and getting excuses about how busy they were, you gave up. You hired another contractor, but most of your quotes were about $125,000. You finally found someone to do the job for $100,000.

The compensatory damages would then require the other contractor to pay you that $100,000. It makes up for the $80,000 you already paid, giving you your money back, and it also covers the additional $20,000 that you had to pay when you hired a new company. You still get the addition for $80,000, just as that first contract specified.

When a contract is breached, make sure you know all of the legal options you have to seek proper compensation.

Source: FindLaw, "What Is the Most Common Legal Remedy for a Breach of Contract?," accessed Dec. 22, 2017

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