Lawyer explains: The Different Types of Damages
Various events can cause damages, such as when a partner violates a contract, when a careless neighbour floods your apartment, or when a drunken visitor attacks you in a bar. The damages resulting from such actions can also occur in several different forms. In general, the damage resulting from an act can be either pecuniary or non-pecuniary. However, the details don't end there. Below, Lepmets & Nõges Law Firm has listed the different types of damages for which compensation can be claimed from the person who caused the damage in Estonian courts.
Direct pecuniary damage
Pecuniary damage is any negative impact on your property in its broadest sense. Pecuniary damage is further divided into direct pecuniary damage and loss of profits. Direct pecuniary damage primarily includes the loss or destruction of property value, as well as the decrease in value associated with property damage and the reasonable costs incurred or to be incurred in connection with the damage.
For example, in the case of damage to property, the pecuniary damage may be the cost of repairing the item, while in the case of buying a new item, the price of that item may be considered. In the case of bodily injury, the damage may take the form of direct medical expenses, as well as costs associated with disability, such as expenses for assistive devices or bathroom renovations. In the case of a breach of contract, such as exceeding the delivery deadline, certain damages that occur as a result of the failure to deliver the goods, such as interest or contractual penalty, may also be compensable. After a traffic accident, the cost of transporting the car to a repair shop may be considered as damages. Damages may also include loan interest, if taking out a loan was objectively necessary due to the damage caused (e.g. for urgent repairs or medical expenses). It is not usually necessary to have already incurred the costs to claim damages, and it is possible to demand compensation for costs that will only arise in the future.
Reasonable costs incurred to prevent or mitigate damages and to obtain compensation, including those related to determining the extent of the damage and presenting claims for damages, are also included in direct pecuniary damages. Thus, costs associated with the assessment of the extent of the damage or the reasonableness and costs of repairs may be compensable. Also included are costs incurred in out-of-court proceedings for professional legal assistance if they are related to assessing the circumstances and legal situation related to the damage. In court practice, it has been found that the involvement of a lawyer in pre-trial negotiations can contribute to a settlement and can help the parties prepare for litigation by taking necessary and reasonable steps to bring claims to court. Therefore, professional legal assistance in the pre-trial stage is generally reasonable, and the costs associated with it are recoverable as damages.
Loss of profit
Loss of profit is the monetary benefit that a person would have likely received, based on the circumstances, particularly the preparations made by the person, if the circumstances that serve as the basis for the compensation for damages had not occurred. Loss of profit may also consist of the loss of an opportunity to receive gain.
Loss of profit is often difficult to estimate because it is probabilistic: one must estimate the expected benefit, other alternative opportunities to earn a profit, work and investments already made and yet to be made in order to obtain the benefit, and so on. Fortunately, case law has established that the difficulty in determining the amount of damages is not a basis for failing to award damages.
Loss of profit can include lost wages, business income, resale revenue, as well as the amount lost due to price increases. The injured party must prove that they had the intention and opportunity to earn a profit, and that this opportunity was lost due to the damage caused. In the case of damage to a car, a typical car owner cannot claim loss of resale profit if they cannot prove that they purchased the car for that purpose or actively worked towards achieving that result prior to the damage incident. However, it is significantly easier for a person engaged in business activities involving the resale of cars to prove the loss of profit.
Although the potential extent of loss of profit can be very high, especially in business activities, it is limited by the principle of foreseeability: according to the law, the breaching party must only compensate for damages that they foresaw or should have foreseen as a possible consequence of the breach at the time of contracting.
Non-pecuniary damage mainly includes the physical and mental pain and suffering of the injured person. Non-pecuniary damage is damage that due to its nature cannot be evaluated as a specific amount. What amount corresponds to a young person's distorted face? How much costs the stress and panic caused by false information published on social media, public insults, and anonymous threatening letters? How to compensate for the loss of opportunity to pursue a favourite hobby or a life spent in a wheelchair?
These questions cannot be answered objectively. Non-pecuniary damage is therefore also called moral or non-material damage. This does not mean that the event that caused non- pecuniary damage must take place in the mental sphere itself. Non-pecuniary damage can also arise from a breach of contract, if the obligation contained in the contract is directed towards following non-material interests. Conversely, damaging someone's reputation can cause direct pecuniary damage, for example, if a cooperation agreement is cancelled due to false allegations spread in the media.
If damage is caused by taking away a person's freedom, causing bodily harm, impairing their health, or violating other personal rights, such as defamation, a reasonable amount of non-material damage compensation must always be paid to the injured person.
Since the size of non-material damage cannot be derived through expertise or invoices, the injured person does not necessarily have to choose a specific amount, but may ask the court to decide what would be a fair amount in the circumstances. However, the judge's opinion may not satisfy the injured person. Therefore, we recommend consulting a lawyer who can better assess what amount is reasonable to ask for and expect. In Estonia, there is an established long-term court practice on various accidents, bodily damage, and other violations, and the non-material damage compensation awarded based on them. Based on court practice and the specific circumstances of your case, the lawyer will find the amount worth arguing for.
Law firms in Estonia: What else affects the extent of the damage claim?
In the case of a damage claim, the basis of the claim is also important. In the case of contractual and non-contractual (i.e. tortious) damages, the types of damages claimed may differ. For example, loss of profit often constitutes purely economic damages, which are generally not compensable in the case of tort liability. On the other hand, damages in contracts are often limited to certain types of damage or maximum amounts.
Since the injured party cannot profit from the consequences of the damage, it should be noted that the injured party cannot claim compensation for damages that are already covered by other institutions, such as health insurance, the unemployment office, and other providers of social benefits. On the other hand, the injured party can still claim from the person who caused the damage the portion of the damage that is not covered by third parties due to limits or deductibles. Costs saved by the injured party due to the occurrence of the damage must also be deducted from the damage claim. For example, in case law it has been found that although an old apartment must have a functioning heating system, it is presumably not brand new, which means that a portion of the cost of replacing the heating system with a new one must be deducted, since the injured party saves money by not having to replace the heating system again after a certain number of years.
When claiming compensation for damages in court, it is important to be specific. The amount of the claim affects the amount of the state fee, and the amount of the claim awarded affects the recovery of legal costs from the other party. In addition, every theoretical right to claim is inevitably limited by circumstances that can be proven. If you have suffered damage, please contact the lawyers at the Lepmets & Nõges law firm, who can help you determine what kind of damage and to what extent you can reasonably claim.