Apr 252012
 

When a party breaches a contract, Pennsylvania law allows for recovery of damages in a breach of contract action. In general, damages in a breach of contract action will total a sum that compensates the nonbreaching party for the loss they sustained. Damages are reasonable compensation awarded for financial losses or injury suffered. However, the nonbreaching party must present evidence that the damages were 1. reasonably foreseeable at the time the contract was entered into, and 2. reasonably certain as to calculations.

A breach of a contract can have significant financial consequences such as:

  • lost profits,
  • lost rental income,
  • increased rental costs,
  • increased labor costs, and
  • increased material costs.

1. Reasonably Foreseeable

The damages must have been a direct result of the breach and reasonably foreseeable at the time the parties entered into the contract. This basically means that the losses incurred by the breach of contract must be in line with what the parties contemplated when they signed the contract. For example, a tenant would reasonably foresee or contemplate that if the tenant breached the lease, the landlord would incur costs such as lost rents, advertising costs, cleaning costs, etc.

2. Reasonably Certain Calculations

The nonbreaching party bears the burden of proving damages by a reasonable certainty or a fair degree of probability. Damages like lost profits must be based on specific evidence which permits a reasonably certain estimate of the amount lost. Exact amounts are not required to be shown. However, a jury is not allowed to speculate as to the amounts. In addition, the damage amount should put the nonbreaching party in as nearly as possible, the same position he or she would have occupied had the contract been performed.

If the financial losses cannot be determined with certainty, then the nonbreaching party is entitled to damages incurred in reliance on the contract, such as costs made during and/or in anticipation of performance. These damages function to place the party in the same position as if the contract had not been made.

Related Article: Pennsylvania Commercial Law: Breach of Contract and the Duty to Mitigate Damages

If you’d like to have your case reviewed by our Pennsylvania and New Jersey commercial and business litigation lawyers, call 215.925.4451. Our lawyers are available for a free, no obligation legal consultation.

The lawyers at Schwartz & Blackman handle cases in the Pennsylvania and New Jersey area:

  • PA: Berks County, Bucks County, Chester County, Delaware County, Montgomery County, Philadelphia County, Allentown, Lehigh Valley, Norristown, Philadelphia
  • NJ: Atlantic County, Burlington County, Camden County, Gloucester County, Mercer County, Middlesex County, Monmouth County, Camden, Cherry Hill, New Jersey shore cities

*This website does not provide legal advice. Every case is unique and it is important to get a qualified, expert legal opinion prior to making any decisions about your case. See the full disclaimer at the bottom of this page.

© 2017 Schwartz and Blackman
Two Liberty Place, 50 South 16th Street, Fl 28, Philadelphia, PA 19102 | PHONE: (215) 925-4451 | FAX: (215) 574-1200

*DISCLAIMER: This website does not create any attorney-client relationship or provide legal advice. The lawyers at Schwartz and Blackman provide legal advice only after accepting a case. It is imperative that any action taken is done on advice of counsel. Since each case is unique, discussion of prior outcomes and settlements in past cases is no guarantee of a similar outcome in current or future cases. The use of contact forms on this site does not establish any attorney-client relationship. Confidential or time-sensitive information should not be sent through them. The AV rating of Martindale-Hubbell, Super Lawyers and organizations that rate attorneys are not designations that have been approved by the State Supreme Courts or the American Bar Association. The ratings and opinions reflect members of the Bar Association and the Judiciary. PRIVACY POLICY

Web Design and SEO legal website content/attorney website content by LCL Web Solutions, Legal Web Content for Lawyers by Lawyers

Suffusion theme by Sayontan Sinha