General damages in contract refer to the compensation that is awarded to the aggrieved party for losses that are naturally and directly caused by a breach of contract. Unlike special damages, which are awarded for any loss suffered due to a breach of contract that is directly attributable to the breach, general damages are more difficult to quantify and are generally awarded for breach of contract that results in a loss that cannot be easily quantified.
The principle behind general damages is that they are intended to put the aggrieved party in the position they would have been in had the contract been performed as agreed. The losses that are subject to general damages can include any loss that results from a breach of contract, such as loss of profit, loss of revenue or loss of goodwill.
The general rule of thumb is that general damages in contract cases are capped at the loss that was foreseeable at the time the contract was made. This means that if the loss suffered by the aggrieved party was not reasonably foreseeable at the time the contract was made, the party responsible for the breach will not be liable for those losses.
There are a number of factors that can be taken into account when calculating general damages. For example, any specific circumstances of the case that might make losses more or less likely to occur can be considered. The purpose of the contract and the relationship between the parties can also be taken into account, as well as any relevant industry practices.
It is worth noting that the award of general damages is not automatic in the event of a breach of contract. The aggrieved party must prove that they have suffered a loss as a result of the breach, and the actual amount of the loss must be quantified. This can be difficult to do, particularly if the loss suffered is intangible, such as loss of goodwill.
In conclusion, general damages in contract cases are awarded to compensate the aggrieved party for losses that are naturally and directly caused by a breach of contract. While they are difficult to quantify, they can be awarded to put the aggrieved party in the position they would have been in had the contract been performed as agreed. The actual amount of damages awarded will depend on a number of factors, including the circumstances of the case, the purpose of the contract and any relevant industry practices.
