Consumer Credit Union pays Derby $10,000 to design an ad campaign.The next day,Derby tells the credit union that he has accepted a job in Boston and cannot design the campaign.As compensatory damages,the credit union can recover
A)$100,000.
B)$10,000.
C)$1,000.
D)$0.

Question

Quizplus · Accepted Answer

Compensatory damages are meant to compensate the injured party for losses suffered due to a breach of contract. In this case, the credit union hired Derby to design an ad campaign for $10,000, and Derby's breach of contract caused them to lose out on that money. Therefore, the credit union can recover the $10,000 paid to Derby as compensatory damages. Choice A is too high as it exceeds the original amount paid to Derby, while choices C and D are too low as they do not compensate the credit union for their losses.

Consumer Credit Union Pays Derby $10,000 to Design an Ad