Emerold Inc. enters into a contract to purchase 3,000 chipsets from Atlaes Inc. It agrees to pay $10 for each chipset. Atlaes manages to deliver only 2,700 chipsets on the stipulated day, leading to a loss in profit for Emerold. The contract did not include a clause about the damages to be paid. If a court decides that Atlaes 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 affected party for the loss they have suffered as a result of another party's breach of contract. In this case, Emerold Inc. suffered a loss in profit due to Atlaes' failure to deliver the agreed-upon number of chipsets, so compensatory damages would be awarded to compensate for that loss. Liquidated damages refer to a specific amount of damages agreed to in the contract, nominal damages are a small amount awarded when no actual loss has been suffered, and punitive damages are awarded to punish the breaching party for particularly egregious behavior. None of these options fully apply to this situation.