How are contract damages figured?

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jul 16, 2021

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If your claim involves a contract, the purpose of compensatory damages is to put you in as good a position as if the defendant had performed the contract. You will be entitled to damages that you can show were actually caused by the defendant’s breach of the contract, which were reasonably foreseeable at the time you entered into the contract, and which are sufficiently certain so as not to be “speculative”. In other words, if you agreed to sell a product for $1,000 that would have cost you $600 to manufacture and deliver, and before you incurred any costs the buyer changed its mind, the damages would consist of the profit of $400 you lost. Even if you could prove that you would have invested the $400 in a stock that later went up ten-fold, that extra amount would be regarded as speculative and unrecoverable.

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