Business disputes can hit hard. Whether a partner is not upholding their end of a deal or a competitor is infringing on your intellectual property, these conflicts can disrupt operations and threaten your bottom line. You might be asking yourself, “What damages can I recover in a business dispute?”
If you have suffered losses in these situations, you can take legal action. Here are the types of damages available and how you can maximize your recovery.
Your Actual Losses
Actual losses are known as compensatory damages. They are intended to reimburse you for the financial losses caused by the other party’s actions. These fall into two categories:
Direct Damages
Direct damages cover the immediate losses from the dispute. Some examples include:
- Unpaid invoices or accounts receivable
- Costs incurred to repair defective work or fulfill an unkept obligation
- Refunds for goods or services never delivered
Direct damages are simple to calculate because they reflect clear, tangible losses.
Consequential Damages
Consequential damages, or indirect damages, cover losses that are not immediate. However, they are a foreseeable result of the breach. This can include:
- Lost profits from delayed projects
- Missed opportunities with other clients
- Supply chain disruptions affecting other contracts
In Illinois, these damages are recoverable. But you must show they were reasonably foreseeable at the time the contract was made or the agreement was breached.
Lost Profits
In many commercial litigation disputes, lost profits make up the largest portion of damages. These are profits you would have earned but for the other party’s actions. A few examples can include:
- Revenue lost because a vendor failed to deliver materials
- Sales opportunities missed due to a partner’s breach
- Income lost from clients diverted by unfair competition
In these cases, courts require that you prove lost profits with reasonable certainty.
Restitution
Restitution prevents the other party from being unjustly enriched at your expense. Unlike compensatory damages, restitution recovers what the other side gained improperly. This could include:
- Deposits or advance payments
- Profits earned from using your intellectual property
- Money paid under an invalid or unenforceable contract
Punitive Damages
Punitive damages are rare in business disputes. However, it can be awarded when the other party’s conduct is especially egregious. These awards are designed to punish wrongdoing and deter similar behavior. Punitive damages may apply in cases involving:
- Fraud or intentional misrepresentation
- Malicious interference with your business relationships
- Willful breach of fiduciary duties or contracts
Courts in Illinois reserve punitive damages for clear, intentional misconduct beyond ordinary negligence or breach.
Attorneys’ Fees and Court Costs
Many business owners can recover legal fees. Whether attorneys’ fees are recoverable depends on:
- The terms of your contract
- Illinois statutes specific to the type of claim
- Evidence of bad faith or willful misconduct
Even when fees aren’t automatically awarded, they are a factor in settlement negotiations.
Equitable Remedies
Sometimes, monetary compensation isn’t enough. Courts can award equitable remedies. These can address ongoing or unique harm.
This can include:
- Injunctions: Orders preventing the other party from continuing harmful actions, such as using your intellectual property or interfering with clients.
- Specific performance: Terms requiring the other party to fulfill a contractual obligation when money cannot replace the lost benefit.
- Rescission: Cancelling a contract and restoring both parties to their original positions.
Equitable remedies are common in intellectual property litigation or partnership disagreements.
Maximize Your Recovery
If you have suffered some type of loss, you have every right to take legal action and seek compensation. However, you will need a plan with documentation. Here is what you can do:
- Document everything: You want to keep contracts, emails, invoices, and financial records organized.
- Consult an attorney early: The sooner you involve legal counsel, the stronger your case.
- Explore alternative dispute resolution: Mediation or arbitration can sometimes recover damages faster and at lower cost than litigation.
- Evaluate all available damages: You don’t want to overlook consequential or equitable damages that may increase your recovery.
Get Relief in a Business Dispute
What damages can I recover in a business dispute? There is a wide range of possibilities, but that will depend on your situation.
At Phillips & Bathke, P.C., we pursue every avenue for recovering damages in disputes. From lost profits to restitution to equitable remedies, we can help in these situations. Schedule a consultation today.
