Legal Definitions - incidental damages

Incidental damages are additional, reasonable expenses incurred by one party directly as a result of the other party breaking a contract. These costs are not the primary loss from the breach itself, but rather the secondary, necessary expenses that arise when the injured party tries to deal with the breach, such as inspecting, storing, transporting, or finding alternative goods or services.

• Example 1: Extra Shipping Costs

  A small bookstore ordered a new shipment of popular novels from a distributor. The distributor breached the contract by failing to deliver the books on time. To avoid losing sales, the bookstore had to quickly arrange for an expedited shipment from a different supplier, which cost significantly more for shipping.

  The extra shipping cost the bookstore paid to the second supplier is an incidental damage. It was a direct and reasonable expense incurred to mitigate the harm caused by the original distributor's breach and to fulfill their customer demand.

• Example 2: Storage Fees for Defective Goods

  A restaurant contracted with a kitchen equipment supplier for a custom-built oven. When the oven was delivered, it was found to be defective and unusable, constituting a breach of contract. While the restaurant negotiated a return and sought a replacement oven, they had to pay for temporary storage of the large, defective unit in a rented warehouse.

  The storage fees for the defective oven are incidental damages. These costs were directly incurred because of the supplier's breach (delivering a non-conforming product) and were necessary to manage the situation until a resolution could be found.

• Example 3: Costs to Find a Replacement Service Provider

  A homeowner hired a landscaping company to redesign their backyard. Midway through the project, the company unexpectedly ceased operations and abandoned the job, breaching their contract. The homeowner then had to spend money on advertising for new landscapers, reviewing bids, and paying for an independent consultant to assess the unfinished work before hiring a new company.

  The expenses for advertising, bid review, and the consultant's assessment are incidental damages. These are reasonable costs directly related to the original landscaping company's breach, incurred by the homeowner to find a replacement and complete the project.