Robert is a Virginia buyer whose seller breached a purchase contract for a home in Roanoke. Robert did not want specific performance — he simply wants to be financially compensated for what he lost. He had already paid for a home inspection ($450), an appraisal ($600), and had locked in a mortgage rate with a fee ($800). Which type of damages would best compensate Robert for these out-of-pocket losses?
Correct Answer
C) Compensatory damages, to reimburse Robert for his actual financial losses
Compensatory damages are designed to make the non-breaching party whole by reimbursing actual, documented financial losses caused by the breach. Robert's inspection fee, appraisal cost, and rate lock fee are all direct, quantifiable out-of-pocket expenses resulting from the seller's breach. Compensatory damages are the appropriate remedy when the buyer seeks financial reimbursement rather than contract enforcement.
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Related Topics & Key Terms
Key Terms:
Related Concepts
An appraisal contingency allows the buyer to cancel or renegotiate the contract if the property's appraised value comes in lower than the agreed-upon purchase price. This contingency protects buyers from overpaying.
An assignment of contract transfers one party's rights and obligations under a contract to a third party called the assignee. The original party, known as the assignor, transfers their contractual position to someone who was not originally part of the agreement.
A bilateral contract is an agreement in which both parties exchange promises and are both obligated to perform, while a unilateral contract is one in which only one party makes a promise and the other party is not obligated to act.
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