What Types Of Damages Can Be Asked For If A Vendor Breaches A Contract With Your Business?

22 June 2015
 Categories: Law, Blog


When you are running a business, this may require you to hire vendors to provide products for you to sell. This often involves signing contracts with these vendors to guarantee you have access to merchandise for a certain time period. Depending on the type of business, these contracts may need to be renewed every year or may clearly state they are to be active for several years. Unfortunately, sometimes these contracts are broken. For whatever reason, a vendor may claim to no longer be able to provide the products that your business relies on to succeed. When this occurs, you may need to file a breach of contract suit against the vendor. These are some of the damages you can claim to support your breach of contract case.

Monetary Compensation Damages

Without the products you have been accustomed to selling in your business, you will surely suffer a substantial monetary loss. Therefore, you have the right to ask to be awarded monetary compensation. These are the two types of damages that fall under this category:

  • Expected Damages - This is the monetary amount that you would normally obtain from selling the number of products the vendor had agreed to provide to you in the contract. 
  • Consequential Damages - This is a monetary amount that you could potentially have gained from any new customers or clients that may have started doing business with you had the vendor not breached the contract. 

Liquidation Damages 

You can also ask the judge to award you liquidation damages. If your business has to close because the vendor breached the contract, you may have to sell the remaining products at extremely reduced prices. This will leave you with much less money than you would have received had the business not closed.

Liquidation damages are an estimated cost of the difference between your retail prices and the liquidated prices. This may include the lower prices you sell remaining products for and the lower prices you sell any other items that were bought to be used to run the business, such as cash registers, display units or security cameras.

Punitive Damages 

You may also be rewarded punitive damages by the court system. This may be an amount determined by the judge alone that is based on how much he feels the vendor should pay. Punitive damages are rewarded to punish the contract breaching party in hopes that he will not do this again.

These damages are often given to the business owner as a form of restitution for the wrong that has been done to him by the vendor. The judge may also rule that the party who breached the contract be responsible for paying all court and attorney costs pertaining to this case.

To prevent a breach of contract from happening, it should be stated clearly that a suit will be filed and damages will be sought should this occur. The vendor may be less likely to breach the contract and if he does, your case against him will be even stronger. For more information, contact your lawyer (like those at Abom & Kutulakis LLP).