law presentation
Damages
Damages are normally an award of money.
Goal: to put the parties into the position they would have occupied had the contract been performed. For example, I offer you a car for £100. You accept. I take back my offer and refuse to sell you the car. You buy a comparable car from someone else and must pay £150 for a comparable car. You may sue me and the court may award you £50 in damages. The court does so to put you back into the financial position you would have had if I had kept to our agreement.
2.2) Classification of damages
Classification of damages- two main types:
a. Unliquidated damages
This means that the amount of damages was not agreed upon by the parties prior to forming the contract. In the event of a breach, a court or arbitrator will determine the amount of damages due.
b. Liquidated damages
This is an amount of money which the parties to the contract agree, in advance, should be paid by the wrongdoer to the innocent party in the event of a breach of a particular term or terms of the contract. The liquidated damages clause, stating the amount agreed upon, is included in the contract. A court will uphold and enforce such a clause as long as the sum is not excessive. If the court thinks the amount is too large much greater than the actual injury incurred by the innocent party, in fact is really more like a punishment, then the court will not enforce it.
It is wise for businesspersons to include a liquidated damage clause in the contract because they may thereby avoid costly court battles over what amount of damages should be paid in the event of a breach. Also, liquidated damages allow the businesses to know in advance the maximum financial liability they might incur in the event that they breach a term of the contract. Therefore, the use of liquidated damages allows better financial planning and decision-making concerning how much insurance should be obtained.
Damages are normally an award of money.
Goal: to put the parties into the position they would have occupied had the contract been performed. For example, I offer you a car for £100. You accept. I take back my offer and refuse to sell you the car. You buy a comparable car from someone else and must pay £150 for a comparable car. You may sue me and the court may award you £50 in damages. The court does so to put you back into the financial position you would have had if I had kept to our agreement.
2.2) Classification of damages
Classification of damages- two main types:
a. Unliquidated damages
This means that the amount of damages was not agreed upon by the parties prior to forming the contract. In the event of a breach, a court or arbitrator will determine the amount of damages due.
b. Liquidated damages
This is an amount of money which the parties to the contract agree, in advance, should be paid by the wrongdoer to the innocent party in the event of a breach of a particular term or terms of the contract. The liquidated damages clause, stating the amount agreed upon, is included in the contract. A court will uphold and enforce such a clause as long as the sum is not excessive. If the court thinks the amount is too large much greater than the actual injury incurred by the innocent party, in fact is really more like a punishment, then the court will not enforce it.
It is wise for businesspersons to include a liquidated damage clause in the contract because they may thereby avoid costly court battles over what amount of damages should be paid in the event of a breach. Also, liquidated damages allow the businesses to know in advance the maximum financial liability they might incur in the event that they breach a term of the contract. Therefore, the use of liquidated damages allows better financial planning and decision-making concerning how much insurance should be obtained.