Contract Damages in Virginia
Ryan C. Young | Richmond Attorney
One of the most common questions I receive from clients in Virginia involves demanding consequential damages for breach ofcontract cases. While breach of contract cases are relatively straightforward, since they typically involve carefully written contracts, they often become complex in damage interpretation.
When requests for consequential damages are introduced, breach of contract cases can often become more convoluted. I find that many potential clients are misinformed on this area of the law. This complexity typically occurs in Virginia because of the language of the law as it applies to contract-related cases.
Recovering consequential damages in Virginia is dependent on both contractual parties “contemplating” such potential damages for the outset, acknowledging this potential and exhibiting knowledge of the consequences of such damages. While many businesses or individuals can suffer damages as a consequence of breach of contract, recovering monetary awards for consequential damages is challenging for an attorney, if the potential harm is not acknowledged by both parties.
The law in Virginia (as in most states) creates some road blocks to collecting consequential damages; breach of contract claims including a demand for consequential damages create a challenge for all parties to the suit. Even when acknowledged by the parties, consequential damages typically cannot become direct damages or subject to liability for the other party.
Direct Damages for Breach of Contract
The Virginia case Kourosh Tabaie v. Maria Luisa Ramos, et. al., CL-2006-3970, defined direct damages as “those which naturally flow from the breach [of contract].” While a bit open-ended with the phrase “naturally flow,” direct damages are less open to interpretation than the other primary category, consequential damages.
Direct damages of a contract breach should be easier for a Plaintiff and his/her attorney to identify and quantify. This helps the court decide whether or not a breach of contract occurred.
Consequential Damages (special damages)
Kourosh Tabaie (above case) stated that: “consequential damages arise from the intervention of special circumstances not ordinarily predictable.” This definition suggests that Plaintiffs may be barred from recovering such damages unless these “special circumstances” were contemplated by both parties prior to the alleged contract breach. Sometimes, potential clients come to me with a laundry list of “damages” they have incurred as a result of the breach of contract. Unfortunately, many times I have to tell them that they will not be compensated for these “damages: because they have no rational correlation to the original agreement. Further, the other party could have never suspected that these outside damages would occur.
The courts consider whether the special circumstances exist or whether the parties contemplated them as a question of fact. The issue of whether damages are classified as direct or consequential remains a question of fact.
Therefore, Plaintiffs hoping for consequential damages must closely follow the advice of their attorney. Narrow definitions exist for consequential damages; breach of contract issues usually are more straightforward.
Business Law | Richmond, VA | Attorney