How to Recover Damages For Breach of Contract in Singapore
So you have a contract with someone who has breached it, causing you to lose money? You’ll want to know how much of that money you can successfully sue them for. This article will give you a basic understanding of the framework Singapore’s courts use to assess damages so that you can calculate what kind of amount you can ask for.
The article will cover:
- The type of damages you can recover in a breach of contract claim
- Whether you can recover all types of damages
- How to recover damages for a breach of contract, including what you need to prove and how damages can be calculated
Types of Damages You Can Recover in a Breach of Contract Claim in Singapore
There are essentially two kinds of damages you can ask for in a breach of contract claim. The first is expectation damages. This is the standard way to calculate damages in a breach of contract case. Expectation damages are the amount of money you would have made if the contract had been performed as agreed.
The second is reliance damages. That is the amount of money that you wasted in reliance on the other party’s promise to do something in return, which they never did.
Can I Recover Both Types of Damages After a Breach of Contract?
You can choose to recover only either expectation damages or reliance damages, and not both. If both measures of damages were granted, the plaintiff (i.e. you, the person who brought a claim for a breach of contract) might actually end up making a profit from the suit instead of getting compensated for the losses suffered as a result of the breach of contract. This kind of “double recovery” is not allowed.
How to Recover Damages For a Breach of Contract in Singapore
Proving substantial costs and wasted costs
To recover anything, regardless of whether you are seeking expectation damages or reliance damages, you will need to file a claim and successfully prove that you have actually suffered substantial loss as a result of the other party’s breach of contract.
If they merely technically breached the contract in some insubstantial way that did not actually cause you real loss, you may win only nominal (very small) damages of e.g. $1. Getting such nominal damages would not be worth it because you will still have to pay your legal fees, which will likely cost you more than what you had obtained in nominal damages.
Further, proving wasted costs for reliance damages will require the production of evidence. Such evidence can include receipts of the costs you incurred in reliance on the other party’s promises. However, these costs are not recoverable if you had just made a bad bargain.
For example, if you would have still ended up losing money even if the other party had performed the contract as they were supposed to, then you will not be able to recover any damages.
Calculating damages to prove the amount of damages
To calculate how much money you would have made for the purposes of claiming expectation damages if the other party had performed the contract (or how much money you would have lost if you are bringing a claim for reliance damages), it would often be necessary to obtain the evidence of expert witnesses to prove how much you would actually have made (or lost). Such expert witnesses can include such as industry experts and forensic accountants.
Furthermore, in proving the amount of expectation damages, you have to show that the profits you could have expected to make if the contract was performed were not too “remote”, i.e. the profits must be predictable.
For example, “opportunity costs”, or the profits that you might have made elsewhere had you not been occupied by trying to perform this contract, are typically not recoverable. This is because it is usually too difficult to predict what kind of business opportunities might have actually materialised, in purely hypothetical terms.
Proving the other party’s failure to perform the contract and mitigation of loss
Also, in trying to recover your losses, you have to prove that:
- The other party’s failure to perform was what actually caused those losses; and that
- You would not have suffered those losses anyway (even if the other party had performed the contract).
Finally, you have to show that you had mitigated, or attempted to reduce, your losses to a reasonable extent. For example, if a tenant breaks a lease, then the landlord would be allowed to recover only the amount of rent lost for the period of time that it would take a reasonable landlord to find another tenant in the particular market conditions of that time. This is because the landlord whose tenant has broken the lease has to make reasonable efforts to find another tenant:
- To rent the property to;
- For a rent amount as close as possible to the previous tenant’s rent amount; and
- As soon as is reasonably possible after the previous tenant leaves.
The landlord will not be able to recover from the previous tenant the entire amount of unpaid rent for the entire remainder of the lease.
As should be obvious by now, this area of the law is quite technical. Expertise in the law of damages, as well as specialised industry expertise, is usually required in order to successfully recover damages for a breach of contract in Singapore.
Therefore, it is highly advisable to engage a civil litigator to advise and represent you if you have lost money due to a breach of contract by another party. A civil litigator should also be able to help you source for any industry experts that you may require to prove your damages.
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