If you have ever encountered a situation where a contract you were a party to was breached, you may be wondering why nominal damages are awarded in such cases. Understanding the concept of nominal damages in contract law is important as it not only helps prevent disputes but also ensures that parties to a contract are held accountable for their actions.

Nominal damages are a type of legal remedy that is awarded to a party who has suffered a loss or damage due to a breach of contract. Unlike compensatory or punitive damages, nominal damages are a small sum of money that is awarded to a plaintiff to recognize the fact that their legal rights have been violated.

There are several reasons why nominal damages are awarded in cases of contract breach. Let`s take a closer look at them below:

1. Recognizing the Breach of Contract

One of the primary reasons why nominal damages are awarded in cases of contract breach is to recognize the fact that a party`s legal rights have been violated. When a breach of contract occurs, it is important for the law to acknowledge the breach and provide a remedy to the injured party.

2. Encouraging the Performance of Contracts

The award of nominal damages also serves as a deterrent for parties who breach contracts. By imposing a penalty, even a small one, the law encourages parties to honor their contractual obligations, thus promoting the performance of contracts.

3. Avoiding Future Disputes

Nominal damages can also help avoid future disputes by resolving minor breaches of contract. By awarding a small sum of money, parties can settle disputes without resorting to litigation or arbitration, which can be costly and time-consuming.

4. Ensuring Accountability

Finally, nominal damages ensure that parties are held accountable for their actions. A breach of contract can cause harm to the injured party, and it is important for the law to hold the breaching party responsible for their actions.

In conclusion, the award of nominal damages in cases of contract breach serves several important functions, including recognizing the breach of contract, promoting the performance of contracts, avoiding future disputes, and ensuring accountability. If you find yourself in a situation where your contract has been breached, it is important to understand your legal rights and seek the advice of competent legal counsel.