Measure of the Damages in case of Breach in Contract

According to Hungarian Civil Code entered into force on 15 March 2018, the person who causes damage to the other party by breaching the contract shall be liable for such damages. Compensation shall be provided in the form of damages for the loss caused to the subject matter of the service.

The amount of damages for the loss caused by non-performance in the property of the aggrieved party, including lost income, is such sum as the aggrieved party is able to verify that the loss, as the potential consequence of non-performance, was foreseeable at the time of the conclusion of the contract. If non-performance was intentional, the aggrieved party shall be compensated for all losses and damages.

According to our experience, proving of lost income is the hardest from among the above mentioned types of damage because of the requirement of foreseeability. That requirement of Hungarian Civil Code drives the parties to inform each other about the essential circumstances of their legal relationship and their important intensions regarding the contract, especially possible profit coming by the contract. Therefore, the other party will have detailed information in connection with consequences of his eventual breach of contract and he will not be able to exclude his liability for damages for lost income with reference to the lack of foreseeability.

Independently of the above mentioned, according to Hungarian Civil Code if the measure of damage cannot be precisely calculated with regard to the special circumstances of the case, the person responsible for causing the damage shall be compelled to pay a general indemnification that would be sufficient to compensate the aggrieved party.