direct damages
Definition
Direct damages are the straightforward, obvious losses that result immediately from someone breaking a contract or causing you harm. If a vendor fails to deliver the supplies you paid for, the money you paid and the sales you lost because you had nothing to sell are your direct damages. Courts award these most commonly because the connection between the wrongdoing and the loss is clear and predictable.
Example
A graphic designer you hired takes your deposit and never delivers your logo, so you sue to recover that deposit plus the cost of hiring a replacement designer at a higher last-minute rate. Those out-of-pocket costs are your direct damages.
Watch Out
Many business contracts include clauses that cap or eliminate direct damages, so read those limitation of liability sections carefully before you sign.
See which terms appear in your contract?
This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.