Legal Definitions - moratory interest

Moratory interest, also commonly referred to as prejudgment interest, is a type of interest that a court may award on a monetary sum from the date a legal claim arose until the date a judgment is officially entered. Its primary purpose is to compensate the party who was owed money for the delay in receiving those funds, recognizing the time value of money and the loss of its use during the period before the court's final decision.

Here are some examples illustrating how moratory interest might apply:

• Breach of Contract for Services Rendered: Imagine a freelance graphic designer, "Artistic Visions," completed a logo design project for "Local Eatery Inc." in February 2022, billing them $2,500. Local Eatery Inc. refused to pay, claiming the design was unsatisfactory, leading Artistic Visions to sue for breach of contract. In October 2023, the court ruled in favor of Artistic Visions, ordering Local Eatery Inc. to pay the $2,500. The court might also award moratory interest on the $2,500, calculated from February 2022 (when the payment was due) until October 2023 (when the judgment was issued). This interest compensates Artistic Visions for not having access to their earned money for over a year and a half.

• Personal Injury Claim with Medical Expenses: Sarah was involved in a slip-and-fall accident at a grocery store in May 2021, sustaining injuries that resulted in $10,000 in medical bills and lost wages. She filed a lawsuit against the store for negligence. In July 2023, a jury awarded Sarah $10,000 for her damages. The court could add moratory interest to this $10,000 award, calculated from May 2021 (when the damages were incurred) until July 2023. This acknowledges that Sarah was deprived of funds to cover her expenses and lost income for more than two years.

• Property Damage from Construction Negligence: A homeowner discovered significant cracks in their foundation in January 2022, which an investigation determined were caused by negligent excavation work performed by a neighboring construction company in November 2021. The repair cost was estimated at $20,000. The construction company denied responsibility, prompting the homeowner to sue. In March 2024, the court found the construction company liable and ordered them to pay the $20,000 repair cost. The homeowner might also receive moratory interest on the $20,000, calculated from November 2021 (when the damage occurred) until March 2024. This compensates the homeowner for the delay in receiving the money needed to address the structural damage to their property.