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How are Damages Calculated for Breach of Contract in Georgia?

When the other party to a contract fails to perform their end of the bargain, it can be difficult to know what damages you should be owed. Fortunately, contract cases are some of the oldest in the law, so methods for determining how damages are calculated have long been established.

Still, calculating damages for breach of contract is highly dependent on the specific facts of the case. In many cases, the damages will be based on the lost value from the contract not being performed. However, you are likely entitled to other forms of damages, like those the other party should have seen coming if they failed in their duties. In some cases, you might have agreed when making the contract as to what the damages should be in the event of a breach. Our team can help you calculate these damages accurately and pursue them through various legal channels.

Call Howe & Associates at (678) 680-6983 to speak with our Georgia corporate attorney and have your case evaluated.

How Do You Determine Damages When Breach of Contract Occurs in Georgia?

In Georgia, it is not uncommon for breaches to occur after contractual agreements are made. In such cases, O.C.G.A. § 13-6-2 outlines how damages are recoverable for a breach of contract. These damages must arise naturally and according to the usual course of things from such a breach. Additionally, damages that the parties contemplated as the probable result of their breach at the time of contract formation are also recoverable.

Generally, the method for computing damages is to assess the difference between the value of the property or service as contracted and its value at the time of the breach. This can be broken down into calculating several types of damages. Fortunately, our Georgia breach of contract lawyers can accurately calculate the full value of your case. Determining the full amount owed in a breach of contract claim requires assessing the following damages:

Calculating Compensatory Damages

These damages are the most direct form of compensation for breach of contract. They cover the actual loss suffered because of the breach, including direct losses and the loss of expected benefits.

Direct losses include the immediate financial impact of the breach, such as payments made for goods or services not received. Calculating these losses usually involves assessing the difference between what was paid or invested under the contract and the actual value received. In cases involving the purchase of goods or services, this might involve comparing the contract price with the market value of what was actually delivered.

Loss of the expected benefit refers to the profit or advantage that would have been realized had the contract been fulfilled as agreed. Calculating this loss often involves complex projections of what could have been and typically requires expert testimony. Essentially, this analysis quantifies the economic advantage the non-breaching party would have gained, which might require a detailed analysis of certain market conditions, business forecasts, and the specific terms of the contract.

Calculating Consequential Damages

Consequential damages are typically awarded for losses that the breaching party should have foreseen as a likely result of their breach at the time the contract was made. According to O.C.G.A. § 13-6-8, these damages are recoverable only to the extent that they can be traced solely to the breach of contract and are capable of exact calculation.

Consequential damages tend to arise from special circumstances that the breaching party knew or should have known at the time the contract was made. These conditions can include lost profits, loss of business opportunities, and other forms of economic harm that are more indirect than direct damages but nonetheless foreseeable and related to the breach.

To calculate consequential damages, the non-breaching party must establish foreseeability by demonstrating that the damages were predictable at the time the contract was executed. This involves showing that the breaching party had reason to know of the special circumstances that would lead to such damages.

Furthermore, the non-breaching party must prove causation, which means there must be a clear and direct link between the breach and the consequential damages claimed. This requires demonstrating that the damages were a direct consequence of the breach and not attributed to some external factors.

Finally, consequential damages must be capable of exact computation. This often necessitates detailed financial records, expert testimony, and rigorous analysis to quantify the losses accurately.

Calculating Liquidated Damages

Contracts often include clauses that predetermine the amount of damages payable in the event of a breach. These are known as liquidated damages. Sometimes, a contract breach inflicts such a peculiar or hard-to-quantify loss that conventional damages fall short of providing just compensation.

To avoid future legal problems, the parties agree on these liquidated damages, which are basically a pre-agreed sum specified within the contract itself, intended to serve as compensation in the event of a breach. However, A liquidated damages clause can be enforced only if it meets two primary criteria.

The first standard acknowledges that certain contractual breaches result in losses that cannot be precisely quantified using standard measures of damages because of their unique nature. This is often the case in industries where the value of performance is highly specific to the parties involved or where the breach affects intangible assets like reputation or market position.

The second principle serves as a safeguard against punitive stipulations that might be disguised as liquidated damages. The agreed-upon sum must not only approximate the anticipated loss but also bear a reasonable relation to it. This prevents the use of liquidated damages clauses as disguised penalties for breach, ensuring they remain compensatory in nature.

Unlike other forms of damages, liquidated damages are not calculated post-breach. Instead, the amount is determined at the contract’s formation based on the parties’ estimation of potential loss. This means the process involves a forward-looking assessment, weighing factors such as the nature of the agreement, the likely impact of a breach on both parties and industry standards for similar losses.

How Can an Attorney Help My Breach of Contract Case in Georgia?

Our attorneys can support you in a number of ways that could make all the difference in your case. Not all agreements are enforceable under Georgia law, so it is best to have our attorneys assess the terms, conditions, and formation of your contract to determine its enforceability. Additionally, there are different types of breaches that can occur, ranging from minor to material. Our team can help identify the nature of the breach and its implications for the case.

When a breach of contract case is filed, it is not unusual for the other party to file counterclaims against you. In order to prepare an effective defense, our firm can evaluate the validity and strength of any counterclaims and develop a strategy to defend against them, whether through negotiation or courtroom defenses.

Our Georgia Contract Breach Lawyers are Ready to Help You Get the Damages You Deserve

For a case review with our Georgia breach of contract lawyers, contact Howe & Associates today at (678) 680-6983.