Damages and loss

Damages is a sum of money which is awarded by the courts for the purpose of replacing the monetary value of property or rights which have been lost or damaged, or to cover expenses, loss, pain and suffering relating to a victim’s injury or death.

Damages is a form of compensation. Compensation is a broader concept which encompasses, for example, money awarded under statutory schemes. On the other hand, damages are usually ordered by the court in actions for breach of contract or in tort (that is, a wrong or breach of duty).

Damages in contract

A contract is an agreement between two or more parties; either individuals or companies. If one party does not follow their part of the contract, then they may be liable to pay damages to the other. The aim of damages in contract law is to place the innocent party in the position which he or she would have been in if the contract had been followed. Damages in contract law will often be liquidated damages, that is, the amount of loss is capable of being calculated with reference to the contract.

Damages in tort

A tort is a civil wrong done by one party to another. An example of a tort is Defamation, where one person makes false comments or statements about another person (see our Defamation factsheets: Defamation – publications before 1 July 2021 & Defamation – publications from 1 July 2021). In this instance, money will be awarded to the second person to compensate them for the harm done to their reputation. As in contract, damages in tort are awarded to place the plaintiff in the position in which he or she would have been had the tort not been committed. A claim in tort gives rise to unliquidated damages; the worth of the damage can only be estimated, not calculated exactly.

Proof of loss and damage

In order to be awarded damages, the claimant (the person bringing the claim) will need to prove that he or she has suffered loss or damage as a result of the breach of contract or the wrong committed by the defendant. This means that the claimant will have to prove to a judge (or jury) that what they claim happened actually did happen. Documentation such as medical bills and receipts will be helpful in proving the claimant’s case.

Loss

Loss is damage, detriment, or suffering flowing from the act or omission of another. It is once this loss occurs that an action for damages or compensation can be brought. A common example of loss is that arising in personal injury cases. If you have suffered an injury that prevents you from working, then you may have suffered a loss of income. If you win your case and prove that you have not received income for a certain time period, then you will be entitled to compensation for your loss.

Injury

Injury can mean physical or mental damage to a person. This type of injury can include the aggravation, acceleration or recurrence of a pre-existing injury, prenatal injury, psychological or psychiatric injury, damage to crutches or aids of a similar nature, nervous shock, death resulting from injuries and disease. In the case of mental injury, the injury must be serious enough to amount to an identifiable psychiatric injury– merely being upset will not be enough to have a claim for damages.

Injury can also mean interference with a legal right, which will often be considered as having a monetary value, but does not require proof of damage. An example of this could be trespass to land, where the trespasser does not otherwise cause any damage.

Injury can also mean physical damage to goods or property.

Types of unliquidated damages

Nominal damages

This is where a court will award the claimant damages of an insignificant amount in a situation where a claimant has not suffered a loss but is still entitled to win the case. An example is the case of Constantine v Imperial Hotels [1944] KB 693, where the plaintiffs were refused accommodation in a hotel. The defendants had committed a tort by breaching their duty as an innkeeper to provide accommodation to paying guests. However, as the claimants could show no actual loss, they were awarded nominal damages of £5.

Contemptuous damages

This is where a court awards a very small amount of damages to indicate the court’s disapproval of the court action having been brought at all. This might be relevant in a Defamation action, where the court considers that the person bringing the action already has a poor reputation, and that the false statement made about the person is unlikely to damage their reputation much further.

Special damages

In contract, special damages are for losses reasonably supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of the breach. For example, if one party knew that the other party would incur a fine if the contract was not completed on time, but still delayed the performance of the contract. In tort, special damages may include compensation for loss and expenditure actually suffered and incurred, for example, medical expenses and loss of income.

To be awarded this category of damages requires precise pleading and proof. This means that the claimant must ensure that they have strong arguments and strong evidence to back up the arguments. It would require exact details concerning, for example, the loss of earnings and medical expenses. These types of damages are most likely to be awarded in personal injury cases.

General damages

General damages are awarded where there has been a breach of a right which gives rise to an action without the need for proof of damage. For example, the tort of Defamation does not require any proof of actual loss to reputation, however, large amounts of money are routinely awarded for assumed injury to reputation.

Aggravated damages

These damages are awarded in cases where the tort is serious enough to justify the awarding of extra money to the claimant. Circumstances giving rise to these damages include improper conduct by the defendant, where the tort was committed in a manner particularly insulting and humiliating, and where significant injury to the claimant resulted, including suffering of an emotional or personal nature.

Exemplary damages

Exemplary damages are awarded in addition to general damages where the court wishes, in addition to compensating the claimant for their loss, to punish the defendant. For example, if a book is published which gives rise to an action for Defamation, then a court might award exemplary damages to balance out the profit made by the defendant in book sales.

Exemplary damages are rarely awarded by a court. That is because they are unrelated to any loss suffered by the claimant or to the effect of the tort upon the claimant. Instead, they are focused upon punishing the defendant. The same set of facts may give rise to both aggravated and exemplary damages.

Parasitic damages

Where an interest has been infringed which is separate to the tort being contested, parasitic damages may be awarded. For example, damages for loss of reputation have been awarded where the tort of false imprisonment has been proven.