Which remedy compensates a party for their loss in a breach of contract?

Compensatory damages are the remedy that specifically aims to make a party whole after a breach of contract. This type of remedy is designed to cover the actual losses incurred due to the breach, putting the injured party in the position they would have been in had the contract been fulfilled as agreed.

For instance, if a party was supposed to provide goods or services and did not perform, compensatory damages would cover the financial losses that resulted from this failure, such as the cost to find an alternative supplier or any additional expenses incurred. The key aspect here is that compensatory damages are directly tied to the loss suffered from the breach, including lost profits and any other foreseeable damages resulting from the breach.

In contrast, remedies like specific performance require the breaching party to fulfill their contractual obligations rather than providing financial compensation. Restitution focuses on returning any benefit that was conferred, rather than making up for losses. Reformation is a remedy that modifies the contract to reflect the true intentions of the parties, rather than addressing loss from a breach. Each of these remedies serves different purposes in contract law, but compensatory damages are the most straightforward way to provide financial relief for losses incurred from a breach.