When a party to a contract does not fulfill their obligations, the other party is usually entitled to collect money damages suffered due to the breach of contract. While the law recognizes different types of damages, the aggrieved party in a breach of contract case is usually entitled to “compensatory damages.” This is a sum of money that will make the non-breaching party whole. In other words, it is enough money to put the aggrieved party in the position that they would have been in had the other party not breached the contract.

The South Dakota statutes expressly allow compensatory damages in contract claims. There are two kinds of compensatory damages: general and special.

General damages are typically easy to calculate and include payment for any direct and inevitable harm that results from a breached agreement. For example, if a party pays a construction company to expand a private roadway but the company fails to do the work, general damages for the breach would include repayment of the amount the party lost.

Special or “consequential” damages are compensation claims for unique circumstances that result in losses that go beyond general damages. To recover special damages, the aggrieved party must show that the breaching party knew about the unique circumstances that might result in additional losses. If the party that paid the construction company to expand the private roadway needed that roadway to be completed by a certain date for critical business needs and, as a result of the failure to expand, their new cargo trucks would not fit onto the existing roadway, additional damages could be warranted to compensate the party for any resulting loss of income/revenue due to the incomplete roadway. For instance, if the party had to rent smaller trucks, establish a temporary transfer station and hire people to move loads from the bigger trucks into the smaller ones that could use the existing road, they could potentially recover damages for those additional and unforeseen costs.

There are other kinds of contract damages i.e., punitive damages. In South Dakota these are only awarded when specifically authorized by other applicable state or federal law.

Based in Rapid City, South Dakota, the Anker Law Group, P.C. is one of the region’s premier business and commercial law firms. If you have a contract claim or dispute, feel free to contact us online or call 605-519-5967 for an initial consultation.