Contracts are signed and completed daily in business, and

naturally not all contracts are carried out by both parties involved. Due
to various reasons, breaches of contract are common in business and
therefore the law has developed various remedies to ensure no party
shall be at a loss due to another partys actions. One of the most
widely used remedies is damages. When this remedy is used, the
breaching party is summoned to pay a monetary penalty to the victim
as compensation for their losses. In its application, damages are
forward thinking in that they are intended to compensate for the
financial position the victim would be in if that breach of contract did
not happen. In other words, damages are paid in a manner that puts
the harmed party in the financial position that they should be in at the
end of the contract. Damages, in essence, protect the parties involved
from the other partys potential breaches.
The law allows for three types of damages: special, general, and
punitive. Special damages are the most straightforward of the three as
they are awarded for specific costs and expenses using market value
to ensure the injured party receives what they were promised from the
contract (legal match). They are said to help make the party whole
again (legal match). General damages are used when an estimate is
needed to find the shortfall from the breach (Yates). Punitive damages
are the least often form of damages used as they are used to punish
the defendant further than specific and general damages. Typically
when punitive damages are used the defendant was reckless in their
actions (Mondaq).
In 2011, the Ontario Court of Appeal ruled on the Agribrands
Purina Canada Inc. v. Kasamekas case. This precedent setting case
redefined the way courts would rule on the extent of damages paid.
The courts determined that:
damages should always be calculated on the assumption that the defendant
would have performed the agreement in the least burdensome fashion, even
absent good faith. (Mondaq)

This ruling made a clear distinction between specific/general damages

and punitive damages in the fact that general and specific damages
would be awarded without consideration of the partys reckless
actions. In order to punish the party for reckless action, punitive
damages are to be awarded on top of the general or specific damages
without considering the damages already awarded. This case provided
clarity for all future contract breach cases.