Understanding Legal Damages: The Different Types


A legal dispute can erupt for a multitude of reasons in a commercial atmosphere, along with the need for understanding legal damages, whether you might own a construction company, restaurant, retail store, or offer a variety of different services to customers in your area. Even the smallest business may be dealing with a variety of different players in each day, to include:

  • Business partners
  • Employees and independent contractors
  • Customers
  • Vendors
  • Landlords
  • Banks or other financial institutions

While some of these issues may be easily solved in a less formal venue than the courtroom, such as arbitration or mediation, speak to your business litigation attorney about what types of damages you are due, and which route is best for you. While litigation may be the best route for resolution, despite taking longer and being less affordable overall, arbitration or mediation can be very successful. Arbitration is somewhat like the courtroom setting, but decisions are usually reached by the arbitrator much more quickly and while testimony and evidence are allowed, it is much more limited. In mediation, a settlement agreement is reached in a much more casual environment; in fact, some mediators may even agree to meet on weeknights or weekends to cater to busy parties. The mediator acts neutrally, helping the motivated parties to look at different ways of understanding the conflict and resolving it.

No matter how you settle or how justice is served, you should be compensated for what you are owed after negligence or misdeeds on the part of another individual or entity. There may also be concerns about preserving long-terms relationships whether that is for personal reasons or protection of the future bottom line.

Damages from the defendant may be compensatory, paying you back directly for a financial loss—or they may be incidental, due to an indirect loss for you in terms of money. There may also be cases where a breach occurred in a business relationship and damages were considered liquidated but had already been considered and outlined in a contract. Punitive damages are awarded when the other party has done something so offensive or negligent that they are being fined with what could be severe financial punishment—with the outcome also serving to warn others about the consequences of their actions.

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