Why are the breach of contract damages in San Diego or a California contract dispute such an important part of the equation?  What are the right steps to take if you are a party to a business breach of contract?  How should damages affect the actions of the parties in a breach of contract scenario?

Important takeaways about Breach of Contract Damages in California:

• Damages are the financial measure of the impact of any contract breach in most business breach of contract cases.  Very few contract dispute cases provided the ability to enforce the contract itself.  This is known as “specific performance remedy” and applies in real estate matters and a few other contract scenarios.   The vast majority of business breach of contract cases will focus on the resulting financial damages.
• Each party in a contract dispute has responsibilities;  The party who is the “victim” of the breach must take steps to mitigate potential damages, and the party who may be responsible for the breach has communication as well as damage limitation responsibilities.
• The Watkins Firm works to thoroughly document the chronology of events as well as a mastery of contract damages.  These are the keys to resolving a breach of contract dispute quickly and in a cost-efficient manner.

Damages are the Key to a Breach of Contract

Damages are the key to a breach of contract case.  California law does not provide “specific performance” (the ability to force a contract partner to perform) except in a few instances such as real estate-related cases.  Therefore, the primary focus of most business breach of contract case is going to be damages.  Breach of contract damages in San Diego and throughout the State of California are, in effect, the cost to the victim of the breach of finding another solution to receive the “benefit of the bargain” anticipated by the completion of the original contract.  However, damages must be documented, realistic and based upon measurable and knowable data – not conjecture.

There Are Several Types of Potential Damages in a Breach of Contract Case

There are several types of potential breach of contract damages in San Diego and throughout California.  Many business contracts specify “Liquidated Damages” within the context of the contract terms and conditions.  For example, the contract might call for the breaching party to pay $1000 per day from the original completion date to the day the contract is actually fulfilled.  “Ordinary damages” refer to the financial cost to help the victim to receive the original benefit of the bargain in the contract.  One example would be the difference in cost between what they would have paid the party who breached the contract for a widget versus what they had to pay another party for that same widget after the breach.

If the Court wishes to send a message to the community it might impose either punitive damages or nominal damages.  Punitive damages are intended to punish those who breach a contract and to deter others from doing so in the future.  If there was no real financial cost resulting from the breach of contract a Court might award “Nominal Damages.”  Nominal damages are not to recoup losses but more of a symbol from the Court regarding who was in the right.

The Responsibility to Mitigate the Damages in a Breach of Contract

It may surprise you to learn that the victim of a business breach of contract has a legal obligation to take reasonable and prompt action to mitigate the losses and the impact of the breach upon their business.  The failure to do so can and will limit the extent of the damages they are able to recover from the breaching party.  Understanding the extent of the damages is the key to resolving any breach of contract case.  The experienced attorneys at the Watkins Firm have more than four decades of experience and legal skill in these cases, and provide our clients with guidance on how to preserve, document and maximize the recovery of damages, while working to resolve the underlying breach of contract dispute.

Pro-Tip: “mastering the damages in the cases so important. First of all, when you are in a lawsuit over a breach of contract or anything, you are investing money to get money. So if you don’t know how much you’re fighting for, how can you know how much you should spend?  Secondly, if you master the damages, if you can prove what the damage to you is, if you obtain and collect all the evidence about the damages, even before you worry about why you were damaged or what the law was breached, you can understand the case, the way a litigator understand understands it. You can help your lawyer and in the long run, you’ll be more successful in your case, by thinking about how you were damaged for, and then working it way back to, uh, who breached what and who broke what law.

So the idea, if you’re the party that’s caused the breach, would be to minimize the risk of the damages downstream, absolutely. However, it’s even more complicated and deeper than that. You don’t have to decide that you are the person that breached because most people, their ego won’t let them do that. But if you’re being accused of breaching, again, the first thing you and your lawyer should talk about or think about is how much are the damages they are alleging that I caused, and how can I, with very little expense, limit those damages.

Someone says you owe $2,000 and you disagree. Well, you could pay them and then fight the case and get your money back. There’s there’s so many situations where looking at the damages can give you a great advantage, even when you’re on the defense side or the plaintiff side, because that’s what you’re fighting about. 

What is mitigating the damages, and when do you have to do it? It’s an obligation under California and federal law. A lot of people get hurt or damaged by someone who breaches a contract. And then they go with this attitude that, well, since ‘they’ caused the breach, (the other party) owes and they don’t try to mitigate their damages. I mean, doing things that would make them not suffer as much from the breach of contract or other types of causes of action. And what happens in the law is a judge or a jury will hear what you did and you’ll think you’re gonna get $300,000 in trial, but they’ll decide that you failed to perform your obligation to reduce the financial impact, to do everything you could to lessen the amount of damages you suffered.  If you want to recover for your losses, you need to mitigate the damages.” – Dan Watkins, Founding Partner

The Factor of “Time”

The other important concept in breach of contract damages in San Diego and throughout California is “time.”  Business litigation in California will take more than a year to get before a Judge, and most of our clients have the objective of resolving their case in the fastest possible time frame and in a cost-effective manner.  Our attorneys carefully analyze and document the damages associated with the breach and use that information as leverage to negotiate a resolution with the breaching party to either perform on the original agreement or pay our clients the proper amount to recoup their losses and the additional costs they have borne as a result of the breach.

The Watkins Firm represents parties in negotiations, mediation, arbitration and when necessary, litigation or trial.  If you are the victim of a breach of contract we invite you to review our podcast Episode 5 – Breach of Contract as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.