“Damages” means the money compensation which Court awards to a party against whom a contract is broken, in order to make good of the loss caused to him by the breach. The fundamental principle underlying damages is not punishment but compensation. The law does not punish a party because he has broken a contract but if, by reason of his wrongful act, the other party has suffered any pecuniary loss, the Court will compel the party in breach to make good that loss by paying damages top other party.
Kinds of damages
(i) Nominal damages are those which are awarded by a Court when it finds that though the defendant has been guilty of a breach of contract, the breach has not caused any appreciable loss to the plaintiff. In such a case the plaintiff is awarded nominal damages, e.g. in the shape of costs of suit.
(ii) Contemptuous damages are awarded where the court finds that though there has undoubtebly been a wrongful act on the part of the defendant, the wrong is of such a trifling or technical character that no reasonably minded person would think of ventilating it before a Court of Law. In such cases law gives contemptuous damages, e.g. farthing or a rupee.
(iii) Examplary damages are damages which are intended to show the court’s strong disapproval of the conduct of the defendant in committing the wrong. They are not proportioned to the actually pecuniary loss sustained by the party injured, but are inflicted by way of punishment, e.g. in case of breach of promise of marriage, defamation, etc.
(iv) Damages may also be (a) general or (b) special. General damages are those which are awarded as compensation for loss, naturally and in the usual course of events resulting from the breach, e.g. on a breach of a contract of sale the difference between the contract price and the market price on the date of breach. Special damages are those which, though flowing from the breach, are only incidentally so, but which are awarded by the court, on the ground that they were in the contemplation of both the parties to the contract at the time they entered into it, e.g. loss of profit on an article of machinery arriving late. These are treated by sec. 73.
(v) Damages may be also (a) liquidated (b) unliquidated. They are liquidated when the contract itself fixes a sum to been paid by one party to other in case of breach. They are unliquidated; when they can only be ascertained by a decree of court in a suit filed by one party against the other for breach of the contract.
Measure of damage:
The above phrase has two meanings in law: (i) it means the general principles according to which damages is to be calculated or assessed in any case of breach of contract. (ii) It also means the actual quantum of damages awarded to a party in a particular case of breach of contract.