Plaintiffs are generally entitled to actual, or compensatory, damages when prevailing in a breach of contract lawsuit. These actual damages can be divided into either direct or consequential damages. Direct damages are damages that occur naturally and necessarily as a result of a wrongful act by the defendant and are presumed to be foreseeable even if such damages are not contemplated by the parties when entering into the contract. Direct damages are generally measured as out of pocket losses or the benefit of the bargain lost. Benefit of the bargain damages are measured by the difference in the value expected minus the value actually received. Another way of stating it would be that the plaintiff is entitled to an amount of money that would put it in as good a position as if the defendant had performed on the contract. Consequential damages are damages that result from a breach when the breaching party has notice or could have foreseen that the other party would suffer and are said to have resulted naturally but not necessarily as a result of a wrongful act by the defendant. Consequential damages must be foreseeable. However, if a contract specifically contemplates certain damages that would otherwise be characterized as consequential damages, they will be considered direct damages. An example of direct damages would be the difference in a price agreed upon in a contract versus the actual price paid by the non-breaching party. So if Company A agreed to buy a product from Company B for $10,000 but Company B could not produce the product and Company A bought the product from Company C for $20,000, Company A’s direct damages would be $10,000. An example of consequential damages from the same set of facts would be the amount of lost sales Company A suffered as a result of Company B’s breach.
Prevailing plaintiffs are also entitled to prejudgment interest in certain circumstances and post-judgment interest in all cases. Post-judgment interest is available once a final judgment is rendered. If a rate of interest is specified in the contract sued upon, the plaintiff will be awarded the lesser of the rate specified in the contract or 18 percent. If no interest rate is specified, the going statutory rate will be awarded which is formulated in the Texas Finance Code and published monthly by the Office of Consumer Credit Commissioner.
Chapter 38 of the Texas Civil Practice & Remedies Code also provides for the recovery of attorney’s fees in a breach of contract case. To recover attorney’s fees, the prevailing party must be represented by an attorney, must present a claim to the opposing party or an authorized agent of the opposing party and payment for the amount owed must not have been tendered prior to the expiration of 30 days from the date of presentment. Assuming proper demand was made, pleading requirements have been met and adequate proof of fees is presented to the court, the prevailing party will recover its fees whether it paid its attorney an hourly rate or on a contingency.