CONTRACT LAW ā Damages ā Distinction Between General and Special Damages in Contract
Principle Statement
Although the terms "special" and "general" damages are not appropriate in an action for breach of contract, there are special circumstances where parties make contracts and bind themselves knowingly that a breach under special circumstances would also attract damages which the parties agreed to at the time of the contract.
Ratio Decidendi (Source)
Per Musdapher, JSC, in G. Chitex Industries Ltd v. Oceanic Bank Int'l (Nig.) Ltd (2005) NLC-1922000(SC) at p. 11; Paras CāD. (Citing Agbaje v. National Motors.)
"Although the terms 'special' and 'general' damages are not appropriate in an action for breach of contract, but there are special circumstances where the parties do make contracts and bind themselves knowingly that a breach of contract under the special circumstances would also attract damages which the parties agreed to at the time of the contract."
Explanation / Scope
“General” and “special” damages terminology is less precise in contract than in tort. Parties may agree in advance on damages for specific breaches (liquidated damages). The principle applies to contract law and damages. The rule recognises party autonomy to stipulate damages. Such agreed damages are enforceable if not penal. The court will give effect to the parties’ agreement on damages.
