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When someone breaks a contract, you may be entitled to damages. Learn what types of compensation U.S. law allows and how courts calculate them.
§1What Is a Breach of Contract?
A breach of contract occurs when one party fails to fulfill a legally binding obligation without a valid legal excuse. This can mean missing a deadline, delivering defective goods, failing to pay, or simply refusing to perform. When a breach happens, the non-breaching party generally has the right to seek monetary damages.
§2Types of Damages You Can Recover
§3Key Legal Principles Affecting Your Recovery
- Duty to mitigate – You must take reasonable steps to reduce your losses. Failing to do so can reduce your award.
- Foreseeability – Consequential damages are only recoverable if the breaching party could have reasonably foreseen them when signing.
- Certainty – Courts require damages to be proven with reasonable certainty. Speculative losses are typically not awarded.
- Statute of limitations – Most states allow 3–6 years to file a breach of contract lawsuit, though this varies.
§4How Courts Calculate Damages
Courts look at the difference in value between what was promised and what was actually delivered. Evidence such as invoices, lost profits projections, market comparisons, and expert testimony all play a role. The burden of proof rests on the party claiming damages.
§5Q: Can I get my attorney's fees paid if someone breaches a contract?
A: Generally, no. The U.S. follows the "American Rule" — each side pays its own legal fees unless the contract specifically includes an attorney's fees clause or a statute allows it.
§6Q: What if the breach was minor, not total?
A: A partial or material breach affects what you can recover. A minor breach may only entitle you to limited damages, while a material breach may allow you to cancel the contract and sue for full losses.
§7Q: Are emotional distress damages available in breach of contract cases?
A: Rarely. Most courts do not award emotional distress damages for breach of contract unless the contract was of a personal nature (e.g., certain employment or funeral service contracts) and the breach was particularly egregious.
§8Q: Does it matter if the contract was verbal?
A: Oral contracts can be legally enforceable, but they are harder to prove. Certain contracts — such as those involving real estate or agreements lasting over one year — must be in writing under the Statute of Frauds.
Disclaimer: This article provides general legal information for educational purposes only and does not constitute legal advice. Laws vary by state, and your specific situation may differ. Consult a licensed attorney in your jurisdiction for advice tailored to your circumstances.
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Frequently Asked Questions
Q. 1. Compensatory Damages+
The most common remedy. These are designed to put you in the financial position you would have been in had the contract been performed.
- Expectation damages – cover the benefit you expected from the deal (lost profits, value of performance)
- Consequential damages – cover indirect losses that were foreseeable at the time the contract was made
- Incidental damages – cover costs you incurred responding to the breach (e.g., finding a replacement vendor)
Q. 2. Nominal Damages+
If you prove a breach occurred but cannot show actual financial harm, a court may award a small symbolic amount — often $1. This still establishes that your rights were violated.
Q. 3. Liquidated Damages+
Some contracts include a pre-agreed damages clause. Courts will enforce these if the amount is a reasonable estimate of anticipated harm, not a penalty.
Q. 4. Punitive Damages+
Rarely awarded in pure contract cases. U.S. courts generally reserve punitive damages for tort claims or situations involving fraud or bad faith.
Q. 5. Restitution+
If no enforceable contract exists (or it fails), you may recover the value of any benefit you already conferred on the other party, to prevent unjust enrichment.
Outcome Distribution for General Cases
* These figures are estimates based on ROY AI similar-case analysis. Results may differ for individual cases and do not constitute legal advice or a guarantee of outcome.
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This document is provided for general informational purposes only and does not constitute legal advice, legal counsel, or a guarantee of outcome for any specific case. For specific legal matters, please consult a qualified legal professional. ROY Legal Insights is an information service and not a law firm. First published: 2026.08.10.