Oregon Construction Contractors (CCB) Practice Test

What type of damages arise due to the special circumstances of the non-breaching party?

1. General damages

2. Consequential damages

3. Special Damages

4. Liquidated damages

The correct answer is: Special Damages

Special damages refer to losses that go beyond the ordinary costs or damages from a breach of contract and are directly tied to the specific circumstances of the non-breaching party. These damages are intended to compensate the injured party for losses that are not typically incurred and are often quantifiable, such as lost profits or specific project expenses incurred due to the breach. For example, if a contractor fails to complete a project by a deadline, the special damages incurred by the client might include additional costs for hiring a different contractor to finish the job, or lost revenue from not being able to operate a business due to incomplete construction. The key aspect of special damages is that they are unique to the situation and specifically arise out of the special circumstances surrounding the breach. General damages, on the other hand, are more typical losses that arise from the breach and are often predictable. Consequential damages also stem from unique circumstances but typically involve a broader range of impacts that were not necessarily foreseeable at the time of the contract. Liquidated damages are predetermined amounts set in the contract that are intended to be paid in the event of a breach, rather than arising from the specific, unique damages suffered by the non-breaching party.