Emerald, Inc. enters into a contract to purchase 3,000 chipsets from Atlas, Inc. It agrees to pay $10 for each chipset. Atlas manages to deliver only 2,700 chipsets on the stipulated day, leading to a loss in profit for Emerald. The contract did not include a clause about the damages to be paid. If a court decides that Atlas must pay monetary damages, which of the following types of damages will be awarded by the court?

Question

Quizplus · Accepted Answer

Compensatory damages are awarded to compensate the non-breaching party for the actual losses suffered as a result of the breach of contract. In this case, Emerald would be entitled to compensatory damages for the loss of profit it suffered as a result of Atlas failing to deliver the agreed-upon number of chipsets. The other options do not apply here:

A) Liquidated damages refer to a pre-agreed upon amount of damages established in the contract, which is not present in this scenario.

B) Nominal damages are a symbolic amount of money awarded when a breach of contract occurs, but no actual loss or damages were suffered by the non-breaching party. This is not the case here, as Emerald suffered a loss of profit.

D) Punitive damages are not generally awarded in contract disputes. They are typically awarded in cases where the breaching party engaged in intentional misconduct or fraud, which is not indicated in this scenario.