Expectation Damages vs Consequential Damages
As has been previously covered in this blog, damages refer to the monetary compensation awarded to victims of an injury or loss caused by another person. Such damages are remedial in nature, in that they attempt to restore the injured party, in as much as possible, to the position they were in before the accident.
This can include ensuring that their medical expenses are covered, compensation for time away from work, and for the emotional and physical impact of the trauma.
While there are many types of damages, the most commonly awarded in personal injury or contract law cases are compensatory.They ensure that the victim does not suffer monetarily due to events outside of their control or caused by someone else. There is more than one type of compensatory damage that the courts may award depending upon type of harm caused. These are referred to as expectation damages and consequential damages.
With expectation damages, the courts are ensuring that if a contract is broken through no fault of your own, you will still receive the financial benefits that you would have expected, had the contract not been breached. For example, if you have taken your employer to court over wrongful dismissal, and the judge finds in your favour, they will likely award you damages based on how much salary you could have expected to receive during the legal notice period for the time of the employment contract.
If however, there was not a set amount of money expected to be received, than expert witnesses may be called in to help the judge determine how much you reasonably could have expected to earn. Once this amount has been determined, any expenses that you would have incurred that are no longer necessary would be subtracted, leaving you with your expected net gain. By using this formula, the courts are able to ensure that you receive the compensation you deserve, while ensuring that the party in breach does not pay more than you would have earned had the contract been seen through.
Consequential damages, on the other hand, are much more difficult to determine. This is because consequential damages are awarded for a monetary loss that was not as a direct result of the defendants wrongful actions, but which were nonetheless foreseeable. This can include loss of reputation, loss of profits, or loss of income as the result of an injury. Such damages are often calculated using the judges’ discretion and with the advisement of expert witnesses, but are awarded with the express purpose of ensuring that the injured party does not unfairly have to bear loss.