A plaintiff usually sues a defendant for damages, that is, for financial compensation. There are two kinds of damages. Liquidated damages are damages that are easily quantifiable by a calculation. Unliquidated damages are damages that are harder to quantify and the court must determine the amount.
An example of liquidated damages is a loan of $25,000 that a borrower has agreed to pay back to a lender in monthly instalments. The agreement includes a term that the whole outstanding amount becomes due and owing if the borrower fails to make the monthly payments. The borrower defaults on the monthly payments. The amount of the damages is easily determined by deducting the actual monthly payments from the $25,000 loan.
An example of unliquidated damages is a septic system deficiency. A purchaser buys a property based upon a representation that the 15 year old septic system is in good working order. The septic system immediately backs up and needs to be pumped out regularly. The purchaser installs a new septic system for $10,000. The vendor is clearly at fault for the misrepresentation but how much is the vendor liable for? The purchaser bought a 15 year old septic system and now has a new one. There is a betterment issue here and, normally, a trial judge will discount the $10,000 to reflect what was purchased. To quantify these damages, the court will need evidence from the plaintiff to determine the value of a new versus an old septic system.
In considering the amount of damages to award a plaintiff, a court will consider what steps, if any, the plaintiff has taken to lessen the damages suffered. There is a positive duty on the plaintiff “to mitigate the damages.” An example is a tenant who has defaulted on a one year lease after three months occupancy. A landlord who is asking the court for compensation for the remaining nine months must show the court the advertising efforts made to re-rent the premises.