This section is from the book "The Law Of Contracts", by William Herbert Page. Also available from Amazon: Commercial Contracts: A Practical Guide to Deals, Contracts, Agreements and Promises.
In actions in tort damages are of three general classes: nominal, compensatory and punitive. In contract the general rule is that damages must be compensatory. The exceptions to this general rule, and the effect of the rule itself must next be considered. Nominal damages may be given in one class of cases. If there is a breach of contract, and no actual damage is shown to have followed therefrom, nominal damages only can be given.1 Thus if A agrees to effect insurance on B's property, and does not do so, B cannot, after loss, recover the amount of such insurance where B has already insured such property.2 So if a corporation is formed to furnish its members with natural gas at a reduced price; and to secure such reduction it is provided that no member shall sell his stock to any person outside of the corporation until the members have had an opportunity to buy, it is held that no actual damages can be recovered, where such sale of stock is made in breach of the contract if by contract with the vendee of such stock the reduced price of gas is maintained.3 So if no damage is shown to arise from a failure to do certain work at the time stipulated, no actual damages can be recovered.4 A agreed to deposit money to take up certain bonds. A did not make such deposit but paid all bonds as presented. It was not shown that the holders of outstanding bonds had such notice that the fact of making the deposit would stop interest on their bonds. It was held that A was liable only for nominal damages for such breach.5 Thus no recovery can be had for breach of a contract to manufacture and lease patented machines if it is not shown that there was some demand therefor.6 So only nominal damages can be given for breach of a contract not to compete if no actual damages are shown to exist.7 If the contract left performance practically optional with the party in default only nominal damages can be recovered. Thus only nominal damages can be recovered for breach of a contract to furnish news items not to exceed three hundred dollars a week.8 If the breach is such that actual damage might result the court is not justified in assuming as a matter of law that the damages are merely nominal. Thus where A agreed to make drop-forgings for B for one year as B should order them, A to ship them to B's customers, according to B's directions, it cannot be assumed that the orders received by B would be so small as to be without profit9 So if a contract to remove earth and leave the surface in a smooth condition is broken by leaving it rough, the court cannot say as a matter of law that no damage followed.10 Substantial damages may be recovered for unwarranted refusal to honor a check.11 Nominal damages at least should be recovered for breach of contract12 Thus if a contract not to reengage in business is broken, nominal damages, at least, should be allowed.13 Nominal damages may be recovered even if it is shown affirmatively that the party complaining of the breach was a gainer and not a loser by reason of such breach. Thus nominal damages may be given where the contractor is forbidden by the adversary party to proceed with the performance of his contract, though it is shown that it would cost more than the contract price to complete the contract.14 So nominal damages may be recovered for breach of a contract by a vendor of realty, though the contract price was higher than the market price.15 The same rule applies in sales of personalty.16
4 See Sec. 1765 et seq.
5 Gallagher v. St. Patrick's Church, 45 Neb. 535; 63 X. W. 864; Chamberlain v. Hibbard, 26 Or. 428; 38 Pac. 437; Robinson v. Baird, 165 Pa. St. 505; 30 Atl. 1010; Brodek v. Farnum, 11 Wash. 565; 40 Pac. 189.
1 Troy Laundry Machinery Co. v. Dolph, 138 U. S. 617; Gruell v. Clark, - Del. - ; 54 Atl. 955; Williamson County v. Farson, 199 111. 71; 64 N. E. 1086; affirming 101 111. App. 328; Rosenbaum v. McThomas, 34 Ind. 331; Tufts v. Bennett, 163
Mass. 398; 40 N. E. 172; Detroit Gas Co. v. Storage Co., Ill Mich. 401; 69 N. W. 659; Lee v. Normal School Co., 1 Neb. (Unofficial) 681; 96 N. W. 65; Jewett v. Wilmot, 51 Neb. 700; 71 N W. 775; Xew Jersey, etc., Co. v. Board of Education, 58 N. J. L. 646; 35 Atl. 397; Strea-tor v. Paxton, 201 Pa. St. 135; 50 Atl. 926; Lancaster Mills v. Cotton-Press Co., 89 Tenn. 1; 24 Am. St. Rep. 586; 13 L. R. A. 518; 14 S. W. 317; Fisher v. Mfg. Co. (Tenn. Ch. App.), 62 S. W. 27; Douglass v. Ry., 51 W. Va. 523; 41 S. E. 911.
2 Lancaster Mills v. Cotton-Press Co., 89 Tenn. 1; 24 Am. St. Rep. 586; 13 L. R. A. 518; 14 S. W. 317.
3 Streator v. Paxton, 201 Pa. St. 135; 50 Atl. 926.
4 Malloy v. Cotton Mills, 132 N. C. 432; 43 S. E. 951.
5 Williamson County v. Farson,
199 111. 71; 64 N. E. 1086; affirming 101 111. App. 328.
6 Doane v. Preston, 183 Mass. 569; 67 N. E. 867.
7 Diers v. Edwards (Ky.), 63 S. W. 276.
8 United Press v. Press Co., 164 N. Y. 406; 53 L. R. A. 288; 58 N. E. 527.