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A court finds a breach of contract and awards a token sum to recognize the breach, without compensating…

Nominal damages are a token award recognizing an established breach where no actual loss is proved. If loss exists but its amount is difficult to prove and the contract…

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A court finds a breach of contract and awards a token sum to recognize the breach, without compensating any proven financial loss. What type of damages is this?

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Answer and explanation

Correct answer D

Nominal damages are a token award recognizing an established breach where no actual loss is proved. If loss exists but its amount is difficult to prove and the contract stipulates a sum, section 74 of the Indian Contract Act, 1872 raises a separate question of reasonable compensation.

Option feedback

Option A

Compensatory damages redress actual loss. The token award in the question recognizes the breach without measuring a loss.

Option B

Liquidated damages involve a sum stipulated in advance. The court’s token award in the question serves a different purpose.

Option C

Exemplary damages are punitive. The award described here recognizes the breach.

Option D

A token award recognizing an established breach without compensating proven loss is an award of nominal damages.

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