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Incidental Damages: A Comprehensive Guide to Their Legal Meaning
Definition & Meaning
Incidental damages refer to the additional costs that a party may claim in a lawsuit due to another party's breach of contract. These damages are meant to cover reasonable expenses that arise as a direct result of the breach. For example, if goods do not meet the agreed specifications, incidental damages can include costs related to inspecting, returning, or reselling those goods. These damages are typically added to compensatory damages, which aim to restore the injured party to their original position before the breach occurred.
Table of content
Legal Use & context
Incidental damages are commonly encountered in civil law, particularly in contract disputes. They are relevant in cases where one party fails to fulfill their contractual obligations, leading to financial losses for the other party. Legal professionals often utilize forms and templates, such as those provided by US Legal Forms, to help clients document and claim these damages effectively.
Key legal elements
Real-world examples
Here are a couple of examples of abatement:
A retailer orders a shipment of electronics that arrive damaged. The retailer incurs costs to return the defective items and order replacements. These costs may be claimed as incidental damages.
(Hypothetical example) A contractor fails to complete a home renovation on time, causing the homeowner to incur additional rental costs while waiting for the work to finish. These additional costs could be claimed as incidental damages.
Relevant laws & statutes
Incidental damages are governed under the Uniform Commercial Code (UCC), which outlines the rights and responsibilities of parties involved in commercial transactions. The UCC specifies that incidental damages include any reasonable expenses incurred due to a breach, such as costs for stopping delivery or returning goods.
State-by-state differences
State
Key Differences
California
Allows for a broad interpretation of incidental damages, including lost profits in some cases.
New York
Focuses on the foreseeability of damages at the time of contract formation.
Texas
Limits incidental damages to those that are directly linked to the breach and reasonably foreseeable.
This is not a complete list. State laws vary, and users should consult local rules for specific guidance.
Comparison with related terms
Term
Definition
Difference
Consequential Damages
Losses that occur as a secondary result of a breach.
Consequential damages are not directly linked to the breach but arise from it, while incidental damages are directly related.
Compensatory Damages
Damages awarded to compensate for actual losses.
Compensatory damages include both incidental and consequential damages, aiming to cover all losses incurred.
Common misunderstandings
What to do if this term applies to you
If you believe you are entitled to incidental damages due to a breach of contract, consider the following steps:
Document all expenses incurred as a result of the breach.
Consult with a legal professional to assess your claim and understand your rights.
Explore US Legal Forms for templates that can help you prepare the necessary legal documents.
For complex situations, seeking professional legal assistance is advisable to ensure your rights are protected.
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