Compensatory Damages

From the Latin compensatory (Latin: "to balance").

In one sentence

Money paid to reimburse a party for actual losses directly caused by a breach or wrongdoing.

Plain English

Compensatory damages are the most common type of damages—they're meant to compensate you for the real, measurable losses you suffered because of someone's breach. If a contractor doesn't finish your kitchen renovation, compensatory damages would cover the cost to hire another contractor to complete it. The goal is straightforward: calculate what you lost and make you whole. These damages don't punish the wrongdoer; they simply restore what you lost.

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Example

A painter agrees to paint your house for $5,000 but does poor work. You hire another painter to fix it for $3,000. You can recover $3,000 in compensatory damages from the first painter.

Used in a sentence

“The court awarded compensatory damages to cover the cost of repairing the defective work.”

Related terms

Damages

Money awarded by a court to compensate a party for losses caused by a breach or wrongdoing.

Expectation Damages

Money awarded to put a party in the position they would have been in if the contract had been fully performed.

Consequential Damages

Money awarded for indirect losses that result from a breach but are not the direct consequence of it.

Remedy

A legal action or payment a court awards to fix a harm or enforce a right after a breach.

Reliance Damages

Compensation for losses suffered by relying on a promise, even if no formal contract exists.

Mitigation of Damages

A duty to take reasonable steps to minimize losses caused by another party's breach.

Offer

A proposal to enter into a binding agreement on specific terms.

Acceptance

Agreeing to the exact terms of an offer, creating a binding contract.

This page is a plain-English reference and is not legal advice. Laws vary by jurisdiction and change over time. For specific situations consult a licensed attorney.