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Contracts are the agreements signed by two parties who are involved in any kind of dealing (business or personal). This will assure that the parties abide by their contractual obligations and avoid legal issues.

Often the parties fail to abide by the rules of the contract, this is considered as breach of contract. The breach of contract is categorized into various kinds so as to know the damage caused to party by its opponents. Further they can claim their rights through legal proceedings.

According to law there are four types of breach of contract-:

Material Breach of Contract, Minor Breach of Contract, Actual Breach of Contract, Anticipatory Breach of Contract.

Further there are six kinds of damages for contract breach:

Compensatory Damages, Consequential Damages, Nominal Damages, Liquidated Damages, Punitive Damages, Incidental Damages

According to the UAE Government, they categorize breach of contract under Material breach and Minor breach.

Minor Breach is when a party misses to follow the minor terms and conditions mentioned in the contract. This may not cause any damage to the non-breaching party. But if they want, they can sue the breaching party for any kind of damage caused by them.

Material Breach clearly violates the purpose of making a contract and causes severe damage to the non-breaching party.

Let us now discuss different kinds of damages for Breach of Contract in UAE:

  • Compensatory Damages

Compensatory note of Civil Code suggest that the compensation should be claimed for the damage that were expected in the parties, while signing the agreement. If the breaching party disagrees the contract, then the case is taken over by the court. The court fixes an amount of compensation after examining the overall damage.

  • Restitutionary damage

This damage occurs to the promising party. It provides them the right to mandate the breaching party, to restore the dignity, honor, reputation, liberty, social standing of the non-breaching party; to what was present at the time of signing the contract.

 

 

  • Liquidated Damages

When two parties sign an agreement, they designate a reasonable amount of money as a compensation that can be claimed by the injured party, if there is any case of breach of contract in the future. This helps the parties to solve the case outside the court. The liquidated damages assure both parties to safely rely on each other in the long business journey.

  • Nominal damage

This damage is considered as a damage award that a court issues when a legal mistake/wrongful conduct occurs. This legal mistake doesn’t cause any actual harm or loss. But the plaintiff (person who brings the case to the court) is awarded with a minimal amount as per the law.

  • Quantum Meruit

The literal meaning of quantum meruit is ” as much as earned “. When the parties sign a contract for a project but one of the parties cancel the project in the mid-way which is considered as breach of contract. The non-breaching party can sue breaching party. The injured party will be receiving remittance.

  • Punitive damage

In this type of damage punishment is unavoidable if the breaching party is found guilty. This type of damage does not fit into regular ones but are very specific to cases where a person or a party has been treated horribly and the behavior of breaching party has been unacceptable. Punitive damages do not apply to cases of small fights or misinterpretations.

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