Incidental Damages

Nick ordered for a tuxedo worth $700. Unfortunately, a substandard tuxedo was delivered to him which was unlike the one he had selected. After having failed to exchange the product, Nick filed a lawsuit against the seller. Once all the facts were verified, he was duly compensated for the losses incurred.

An aggrieved claimant is awarded damages, in order to compensate for the injury, loss, or breach of contract. In case of a breach of contract between a buyer and seller, the court will award incidental damages to the aggrieved party and make the defaulting party pay for the losses.

What are Damages in Legal Terms
In order to understand the meaning and utility of incidental damages, it is important to know the meaning of damages. Damages in legal terms refer to the money paid to the claimant, so as to compensate for the loss or injury caused by another party. However, damages awarded in tortuous claims and actions are different from commercial actions. The most common types of damages claimed are compensatory and general damages. While general damages cater for non-monetary aspects of loss or injury, compensatory or actual damages focus solely on the monetary losses incurred by the aggrieved party. The objective of such a provision is to protect the consumer or seller from being cheated. It also aids in ensuring that the parties refrain from breaching the terms of a contract.

Definition of Incidental Damage
Incidental damages come under the purview of special damages, which include consequential damages. Damages of consequential action are awarded to help the aggrieved party regain its previous economic stand, by indemnifying the immediate losses, indirect losses, as well as the anticipated profits that the aggrieved party could have made, had the contract not been breached.

Under the Uniform Commercial Code, incidental damages are expenses reasonably incurred by either party to a transaction in caring for goods after the other party's breach of the contract. The Uniform Commercial Code, safeguards the interest of the seller and buyer under the following sections:

Section 2-710
This section seeks to protect and compensate the aggrieved seller. It states - Incidental damages to an aggrieved seller include any commercially reasonable charges, expenses or commissions incurred in stopping delivery, in the transportation, care and custody of goods after the buyer's breach, in connection with return or resale of the goods or otherwise resulting from the breach.

Section 2-715(1)
This section is favorable for the buyer and states - Incidental damages resulting from the seller's breach include expenses reasonably incurred in inspection, receipt, transportation and care and custody of goods rightfully rejected, any commercially reasonable charges, expenses or commissions in connection with effecting cover and any other reasonable expense incident to the delay or other breach.

As mentioned earlier, incidental damages can be availed in commercial contracts, so as to restore the losses and damages incurred as a result of the other party's negligence or noncompliance. The burden of proving breach of contract rests on the party claiming to have suffered losses. On the other hand, the accused party must prove that it has not violated the terms of the contract and is thus not liable to indemnify for the losses incurred.