Legal Definitions - nomine damni

Nomine damni is a Latin legal term, primarily found in Scots law, which translates to "by way of damage." It refers to an action, payment, or obligation that is undertaken or imposed specifically as compensation or reparation for a loss, injury, or harm that has occurred. Essentially, it signifies that something is being provided or required *because* damage was sustained.

• Example 1: Contractual Delay Compensation

  Imagine a software development company that signs a contract to deliver a new application by a specific date. Due to unforeseen technical issues, they deliver the application two months late. The contract includes a clause stating that for every week of delay, the company must pay a fixed sum to the client. This payment is not merely a penalty; it is intended to compensate the client for the financial losses they incurred due to the delay, such as lost revenue from not launching their product on time. This compensation would be considered paid nomine damni, as it directly addresses the damage caused by the late delivery.

• Example 2: Property Damage and Lost Income

  A construction crew accidentally damages a neighboring small business's storefront during excavation, forcing the business to close for repairs for three weeks. The construction company agrees to cover not only the cost of repairing the storefront but also the business's lost profits during the three weeks it was unable to operate. The payment for lost profits is made nomine damni, as it directly compensates the business for the financial damage it suffered due to the construction crew's actions.

• Example 3: Interest on Overdue Funds

  A large corporation fails to pay an invoice from a small supplier on time, holding onto the funds for several months beyond the agreed-upon payment date. The supplier's terms of service stipulate that overdue payments will accrue interest at a certain rate. This interest is not a charge for the goods or services themselves, but rather a payment nomine damni. It serves to compensate the supplier for the financial detriment caused by the delayed access to their money, such as lost investment opportunities or the need to cover operational costs with other funds.