Contracts & ExecutionQuestion 867 of 1632

Nominal damages are awarded when:

a.The contract fixed liquidated damages for the breach in advance
b.A breach occurred but the party proved little actual loss
c.The injured party proves a large, precisely calculated financial loss
d.The breaching party acted with malice and should be punished

Explanation

Nominal damages are a token sum recognising that a right was invaded where no substantial loss was proved; Civil Code §3360 provides for them expressly. They are not pointless: a nominal award still establishes the breach, which can carry a costs or attorney's-fee entitlement with it. (c) describes compensatory damages, the ordinary measure under Civil Code §3300. (d) describes punitive damages under §3294, which punish rather than recognise and are unavailable on a contract claim. (a) describes liquidated damages under §1671 — a figure the parties agreed to in advance, which displaces the need to prove loss at all.

Law Reference: Civil Code §3360; cf. §3300, §3294, §1671

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