General Damages
Damages that flow naturally and necessarily from a breach of contract, compensating for losses that are the direct and foreseeable result of the breach; contrasts with special/consequential damages.
While straightforward in theory, many businesses fail to actively track obligations tied to this concept - often resulting in missed deadlines, unintended renewals, penalties, or loss of contractual rights.
US Law · For business owners and foundersWhat is a General Damages?
General damages are damages that flow naturally and necessarily from a breach of contract and are the direct and foreseeable result of the breach. General damages compensate the injured party for losses that any reasonable person would expect to suffer if the contract were breached in that manner.
The key distinction between general and special damages is foreseeability. General damages are those that are naturally foreseeable as a result of the breach - for example, if a seller fails to deliver goods, the buyer suffers the general damage of not having the goods. Special (or consequential) damages are remote or indirect losses that result from special circumstances known only to the breaching party.
Under the Hadley v. Baxendale rule (a foundational principle of contract law), parties are liable for general damages but not for special damages unless they had actual knowledge of the special circumstances at the time of contract formation.
In practice, many teams rely on a contract expiry tracking system to stay on top of dates and obligations tied to clauses like this.
Key Elements
Direct Result of Breach
The damage must be a direct result of the breach, not a remote or indirect consequence. This distinguishes it from special damages.Foreseeable
The damage must be foreseeable at the time the contract was made. This is measured by what a reasonable person would foresee, not by the actual knowledge of the parties.Naturally Flowing
The damage naturally flows from the breach without any special or unusual circumstances. If special circumstances are involved, the damage becomes "special" or "consequential" rather than general.Measurable
General damages must be capable of measurement and proof, though not necessarily with mathematical precision. Reasonable estimates are acceptable.Real-World Example
ABC Supplier contracts to deliver 1,000 widgets to XYZ Retailer by November 1 for the holiday season. ABC fails to deliver. XYZ cannot sell the widgets. XYZ claims damages of $50,000 (the lost profit on the widgets) and $100,000 (the cost of rush-ordering replacement widgets from another supplier at higher cost).
The $100,000 cost of cover is likely general damages because any buyer would need to source replacement goods. The $50,000 lost profit may be general damages if it is the typical profit margin, but it could be special damages if the retailer had contracted to resell at an unusually high price. General damages are foreseeable; special damages require proof of special knowledge.
This is why many businesses adopt automated deadline tracking to ensure no critical dates are missed before they pass.
Sample Clause Language
Limitation of DamagesWatch Out For
General damages are easier to recover than special damages
Do not assume you can recover special damages without proving knowledge. Focus on general damages, which require less proof and are more likely to be awarded.Reasonable estimates of general damages are acceptable
You do not need to prove general damages to the penny. Reasonable estimates and industry standards are often sufficient.General damages may be capped in the contract
Many contracts include clauses limiting damages to direct damages only, excluding all consequential or special damages. Understand your damage limitations.Don't let general damages deadlines catch you off guard
Key dates tied to general damagess - renewal windows, expiry cutoffs, notice periods - can easily slip through the cracks when tracked manually. Missing them triggers automatic extensions, penalties, or lost rights. ExpiryEdge tracks every critical deadline and sends automated reminders before they're due - so nothing slips.
Instead of relying on spreadsheets or manual follow-ups, a centralized renewal reminder system ensures every deadline is visible, tracked, and actioned automatically.
How to Use This in Your Favor
Prove general damages with market data and industry standards
Use comparable transactions, market prices, and industry standards to prove general damages. These are often more persuasive and efficient than detailed loss calculations.If you want to recover special damages, disclose them at contract formation
If there are special circumstances that could result in unusual damages (e.g., a specific customer you are reselling to), disclose them in writing at the time of contracting.Related Terms
Frequently Asked Questions
What if I can prove my actual losses exceed general damages - can I recover them as special damages?
Only if you disclosed those circumstances at the time of contract formation. General damages are what a reasonable person would foresee. If your losses are unusual or remote, they are special damages, which require proof of notice.
Is lost profit always general damages?
Usually, yes - if the profit is the typical margin expected in the industry. But if you had an unusual resale contract at a higher margin, that might be special damage requiring proof of notice.