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.
Apart from the few instances referred to in the preceding sections, in which either nominal or punitive damages may be allowed, the general rule of the law of damages, namely, that compensation is to be sought as far as is practicable applies with especial force to contract law. The law attempts to place the party injured by the default of his adversary in the position which he would have had if such adversary had performed, as nearly as can be done by means of a judgment for money.1 Like most general rules, however, this proposition does not furnish the means of solving the questions as they actually arise, but only states a general tendency of the courts. The difficulty found in this connection, is in determining what items of loss can be considered in determining the amount of actual damages. In determining what elements of loss are to be considered in estimating the amount of compensatory damages, the loss to the party in default, caused by the breach, may come under one of five classes. (1) The damages may be such as would arise according to the usual course of things from such a breach of the contract as that involved.2 (2) The damages may not be such tempting to make an exhaustive enumeration of all the different forms of contract which may be broken.
2 American National Bank v. Morey, - Ky. - ; 58 L. R. A. 956; 69 S. W. 759. At least, if no intent to injure by such refusal is shown to exist. Wood v. Bank, 100 Va. 306; 40 S. E. 931.
3 State, etc.. Association v. Baldwin, 116 Ga. 855; 43 S. E. 262.
4 See Sec. 1572.
1 Worthington v. Given. 119 Ala. 44; 43 L. .R. A. 382; 24 So. 739; Hoyle v. Stellwagen, 28 Ind. App.
681; 63 N. E. 780; Hurxthal v. Lumber Co., 53 W. Va. 87; 44 S. E. 520.
2 "When two parties have made a contract which one of them has broken, the damages which the other ought to receive in respect to such breach of contract should be such as may fairly and reasonably be considered either as arising naturally, i. e., according to the usual as would, in the natural course of things, arise from such a breach of the contract; but the parties may, by their express stipulation, have provided for a special course of things, and the damages may follow from such special course of things thus provided for. (3) The damages may be such as would not follow in the usual course of things, but they may follow from a special course of things not provided for in the contract but known to the party in default as contemplated and intended by the adversary party. (4) The damages may be such as do not follow from the ordinary course of things, but they may follow from a special course of things which the party in default knows will probably follow, though he is not positively notified of such fact. (5) The damages may be such as do not follow in the ordinary course of things, but do follow from a course of things contemplated and intended by the injured party, but not known to exist by the party in default. The first of these classes consists of the damages which arise in the usual course of things as a consequence of the breach. These damages are given by the law, without proof of any especial facts and circumstances.3 Any more exact statement of this rule requires a consideration in detail of the special types of contract. In this connection, we will select characteristic and typical examples, without atcourse of things, from such breach of contract itself, or such as may reasonably be supposed to have been in the contemplation of both parties at the time they made the contract, as the probable result of breach of it." Hadley v. Baxendale, 9 Exch. 341 (353) ; quoted in Taylor Mfg. Co. v. Hatcher, 39 Fed. 440, 447; 3 L. R. A. 587; J. Wragg & Sons v. Mead, 120 la. 319; 94 N. W. 856.
3 Van Arsdale v. Rundel, 82 111. 63; Illinois Central Ry. v. Cobb. 64 111. 128; Cornell v. Rodabaugh, 117 la. 287; 94 Am. St. Rep. 298; 90 N. W. 599; Cobb v. Ry., 38 la. 601;
Connolly v. Sullivan, 173 Mass. 1; 53 N. E. 143; Squire v. Telegraph Co., 98 Mass. 232; 93 Am. Dee. 157; Wright v. Iron Co., 129 Mich. 543; 89 N. W. 335; Coxe v. Power Co., 87 Minn. 56; 91 X. W. 265; Jewett v. Wilmot, 51 Neb. 700; 71 N. W. 775; Hexter v. Knox, 63 N. Y. 561; Talbot v. Boyd, 11 N. D. 81; 88 N. W. 1026; Kelly v. Wheel Co., 62 O. S. 598; 57 N. E. 984; Smith v. Lime Co., 57 O. S. 518; 49 N. E. 695; Kinports v. Breon. 193 Pa. St. 309; 44 Atl. 436; Rhoades v. Ry., 40 W. Va. 494; 87 Am. St. Rep. 826; 55 L. R. A. 170; 39 S. E. 209.