The examples and perspective in this
article deal primarily with
common law and do not represent a worldwide view of the subject
In law, damages is an award, typically of money, to be paid to a person as compensation for loss or injury grammatically, it is a singular noun,
not plural. The rules for damages can and frequently do vary based on the type
of claim which is presented (e.g., breach of contract versus a tort claim).
1. Example
1.1 Speculative damages
Speculative damages are damages that have not yet
occurred, but the plaintiff expects
them to. Typically, these damages cannot be recovered unless the plaintiff can
prove that they are reasonably likely to occur.[4]
2. Quantification of personal injury claims
2.1 Special damages
Special damages compensate the
claimant for the quantifiable monetary losses suffered by the plaintiff. For example, extra costs, repair or
replacement of damaged property, lost earnings (both historically and in the
future), loss of irreplaceable items, additional domestic costs, and so on.
They are seen in both personal and commercial actions.
Special damages can include direct losses
(such as amounts the claimant had to spend to try to mitigate problems)
and consequential or economic losses resulting from lost profits in a business.
Special damages basically include the compensatory and punitive damages for the
tort committed in lieu of the injury or harm to the plaintiff.
Damages in tort are awarded generally to
place the claimant in the position in which he would have been had the tort not
taken place. Damages for breach of contract are generally awarded to place the
claimant in the position in which he would have been had the contract not been
breached. This can often result in a different measure of damages. In cases
where it is possible to frame a claim in either contract or tort, it is
necessary to be aware of what gives the best outcome.
If the transaction was a "good
bargain" contract generally gives a better result for the claimant.
As an example, Neal sells Mary a watch for
£100. Neal tells Mary it is an antique Rolex. In fact it is a fake one and
worth £50. If it had been a genuine antique Rolex, it would be worth £500. Neal
is in breach of contract and could be sued. In contract, Mary is entitled to an
item worth £500, but she has only one worth £50. Her damages are £450. Neal
also induced Mary to enter into the contract through a misrepresentation (a
tort). If Mary sues in tort, she is entitled to damages that put herself back
to the same financial position place she would have been in had the misrepresentation
not been made. She would clearly not have entered into the contract knowing the
watch was fake, and is entitled to her £100 back. Thus her damages in tort are
£100. (However, she would have to return the watch, or else her damages would
be £50.)
If the transaction were a "bad
bargain", tort gives a better result for the claimant. If in the above
example Mary had overpaid, paying £750 for the watch, her damages in contract
would still be £450 (giving him the item he contracted to buy), however in tort
damages are £700. This is because damages in tort put her in the position she
would have been in had the tort not taken place, and are calculated as her
money back (£750) less the value of what she actually got (£50).
3. Statutory damages
Statutory
damages are an amount
stipulated within the statute rather than calculated based on the degree of
harm to the plaintiff. Lawmakers will provide for statutory damages for acts in
which it is difficult to determine the value of the harm to the victim.
For example, United States Civil Code 18 USC §§2520 provides for statutory damages to
victims of various wiretapping offences. The Lanham
(Trademark) Act provides for
minimum damages of $500 per type of item, for goods sold with unauthorized use
of a trademark (15 U.S.C. § 1117(c), Lanham Act Section 35(c).). In copyright law, European directive 2004/48/EC on the Enforcement of Intellectual
Property Rights bases damages on, "the amount of royalties which would
have been due if the infringer has requested authorization".
4. Aggravated damages
Aggravated damages are not often awarded;
they apply where the injury has been aggravated by the wrongdoer's behavior,
for example, their cruelty.
5. Arbitration award
An arbitration award (or arbitral
award) is a determination on the merits by an arbitration tribunal in an arbitration,
and is analogous to a judgment in a court of
law. It is referred to as an 'award' even where all of the claimant's
claims fail (and thus no money needs to be paid by either party), or the award
is of a non-monetary nature.
6. Subrogation
Subrogation in its most common usage refers to circumstances in which an insurance
company tries to recoup expenses for a claim it paid out when another party
should have been responsible for paying at least a portion of that claim.
More specifically,
subrogation is the legal technique under common law by which one party, commonly an insurer
(I-X) of another party (X), steps into X's shoes, so as to have the benefit of
X's rights and remedies against a third party such as a defendant (D).
Subrogation is similar in effect to assignment,
but unlike assignment, subrogation can occur without any agreement between I-X
and X to transfer X's rights. Subrogation most commonly arises in relation to
policies of insurance,
but the legal technique is of more general application. Using the designations
above, I-X (the party seeking to enforce the rights of another) is called the subrogee.
X (the party whose rights the subrogee
is enforcing) is called the subrogor.
In each case, because
I-X pays money to X which otherwise D would have had to pay, the law permits
I-X to enforce X's rights against D to recover some or all of what I-X has paid
out. A very simple (and common) example of subrogation would be as follows:
1. D drives a car negligently and damages X's car as a result.
2. X, the insured party, has Collision insurance, and claims (i.e., asks for
payment) under his policy[1] against I-X, his insurer.
3. I-X pays in full to have X's car repaired.
4. I-X then sues D for negligence to recoup some or all of the sums paid out
to X.
5. I-X receives the full amount of any amounts recovered in the action against
D up to the amount to which I-X indemnified X. X retains none of the proceeds
of the action against D except to the extent that they exceed the amount that
I-X paid to X.
If X were paid in full
by I-X and still had a claim in full against D, then X could recover
"twice" for the same loss. The basis of the law of subrogation is
that when I-X agrees to indemnify X against a certain loss, then X "shall
be fully indemnified, but never more than fully indemnified ... if ever a
proposition was brought forward which is at variance with it, that is to say,
which will prevent [X] from obtaining a full indemnity, or which will give to
[X] more than a full indemnity,
that proposition must certainly be wrong."[2]
I-X will normally (but
not always) have to bring the claim in the name of X. Accordingly, in
situations where subrogation rights are likely to arise within the scope of a
contract (i.e. in an indemnity insurance policy) it is quite common for the
contract to provide that X, as subrogor,
will provide all necessary cooperation to I-X in bringing the claim.
Subrogation rights can
also come into play when X brings the action against D. To the extent that X's
recovery against D reflects damages incurred by X that were already covered by
I-X, I-X will have a lien on the proceeds of the action. In the
collision example above, it would be typical for X to sue D, asserting as one
element of damage the cost of repairing X's car. I-X's lien would extend to
whatever D paid X that was allocable to that claim, but not to what was
allocable to X's other claims against D, such as lost wages or pain and suffering.
Subrogation is an equitable
remedy and is subject to all
the usual limitations that apply to equitable remedies.
Although the basic
concept is relatively straightforward, subrogation is considered to be a highly
technical area of the law.
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