What are damages in a business dispute or lawsuit?  Why is it so important to understand the concept of damages and how they are to be calculated?  How does a well-documented chronology of events affect the amount of damages as well as the outcome of any business dispute?

3 Key Takeaways about Damages in a Business Dispute or Lawsuit:

• Damages are the primary legal remedy in any business-related dispute.
• Damages are the financial equivalent of the cost to repair what has happened, or for the victim to achieve the benefit of the original bargain.
• Mastery of the damages and the chronology of events is the key to any business dispute or lawsuit.

Damages are the Primary Remedy in a Civil or Business Lawsuit

The core of business litigation and disputes legally comes down to “damages”.  Damages are the actual losses or financial impact and/or value of an action or lack of action.

Take the example of damages in a breach of contract case.  What is the cost in dollars for the lost opportunity, the need to find another supplier, the failure to meet contract deadlines and commitments, the ability to achieve the benefit of the anticipated bargain, or the potential exposure of the company?

The concept of damages are also important in the defense of a breach of contract.  If the other party does not take prudent, timely action to mitigate the damages it serves as a valid defense for the party who has breached the agreement.

Unless the matter involves real estate, the Court is not going to order “specific performance”.  In other words, the Court won’t order someone to simply hold up their end of the contract and do what they said they were going to do.

The Court will need to establish how much, in terms of dollars, was the value of the “damages” to the plaintiff.  How much will it cost for them to receive “the benefit of the bargain,” as if the contract had been completed as originally conceived and executed.  This could literally take years.

This is why it is important for any business professional to understand the answer to “what are damages and why are they important in a dispute?”  It’s usually more timely and cost-effective to negotiate a solution between the parties that provides the best possible outcome based upon the specific circumstances surrounding the transaction or dispute.

Pro-Tip: “Knowing the facts, the damages, the law of the damages is key, because that gives your lawyer the ability to predict what would happen if you went to trial tomorrow and you won, what would you win? That’s it, that’s the number. Because in civil court, we’re only looking at dollar amounts,  getting there, and understanding human nature. Preparation for my clients has to do with damages, the law and damages the facts, getting all the facts down and then informing my client.

We want to get the facts down and we want the evidence they have in chronological order, because that’s the best way to communicate to the other party to a third party, to anyone is in chronological order. That’s how we think. Then I want to help our clients analyze the damages. Whether you are feeling like they owe you something, they’re not complying with the agreement or vice versa. So I want to want something more from you than just to analyze the damages, we need to analyze what it’s going to cost to fight. And also look at the future business. Whether we can salvage this relationship, all of those important things should come into play, so that we can give good advice.

In a business dispute usually its really clear who broke the agreement. However, businesses operate on a longitudinal graph of time. So if you just analyze this person broke this agreement with me today and don’t analyze what the value of the overall investment is, right then you’re not really doing yourself anything worthwhile. You’re just being too focused on one little breach. When you could focus on that breach, balanced against how much profit I made over the years, balanced against my total investment balanced against, you know, do I want to continue on all those factors, which believe it or not we have experts for, they can put it in a number if we have to go to trial, but we can also talk intelligently with our clients about, okay, let’s put some numbers and value on this. And so that we’re not thinking too narrowly in a small box, we’re thinking outside the box and we know what we’re talking about. And what’s good for us as a business decision and as a legal decision.

If you’re going to stay in business with each other, then you’re going to want additional clauses and assurances that this thing won’t happen again, you’re going to want to give some kind of compensation or power, change the structure, do something to improve the situation. Those things we can handle because we have a transaction team here too. So when we acquire business, we’re already putting those kinds of clauses in. So you might be in a business dispute with a partner because you didn’t have those types of clauses in your agreement to begin with. And perhaps the resolution of your lawsuit will be having proper paperwork to go forward.” – Dan Watkins, Founding Partner

What are Damages in a Dispute or Lawsuit from the Perspective of Resolution?

As San Diego business dispute attorneys with more than four decades of experience and expertise in these matters, we bring a very realistic and practical approach to the dispute.  We’re not going to allow our client to be pushed around.

Usually, it is in our client’s best interest for us to seek common ground and negotiate a solution that achieves a solution that either maximizes their profit or limits the extent of their losses. This requires a mastery of the facts in the case at hand and the value and leverage of associated damages.  It should comfort our clients to know the Watkins Firm is able to resolve the vast majority of our business disputes and lawsuits through effective, leveraged negotiation.  This is the fastest, least expensive path to resolve a business dispute or lawsuit in California

In many cases we are able to find a creative solution that allows the parties to complete the contract to their mutual benefit.  If you are involved in a business dispute and have a question about “what are damages and how do I protect my interests?” we invite you to review our podcast Episode 11 – Business Dispute Resolution as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today.