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The Differences Between Pecuniary and Non-Pecuniary Loss

The Differences Between Pecuniary and Non-Pecuniary Loss

Find out the differences between pecuniary and non-pecuniary loss and how it can impact on your recovery of damages.

1st December 2020
Reading Time: 2 minutes

If you have suffered losses from a breach of contract, you have the right to seek compensation. This is known as damages. This compensation comes in the form of both pecuniary and non-pecuniary losses. While these legal terms can seem complex, gaining an understanding of them will help you navigate your claim. This article will explain the differences between the two terms and what they mean for your legal rights when recovering damages. 

What are pecuniary losses? 

The definition of the word pecuniary is relating to money. In the context of a breach of contract, any losses which can be measured in financial terms will be seen as pecuniary. Pecuniary losses are sometimes referred to as ‘economic damages’. Pecuniary losses come in a number of forms, some of which are: 

  • Lost revenue; 
  • Lost wages; 
  • Superannuation losses; 
  • Medical bills; and
  • Costs relating to mitigating losses stemming from breach of contract. 

These losses all relate to a financial loss, and can be recovered as compensatory damages. Claims for pecuniary losses are all subject to certain limitations. These limitations are causation, remoteness and mitigation. Claims for pecuniary loss are the most common which stem from the breach of a contract between two businesses. 

What are non-pecuniary losses? 

Non-pecuniary losses are damages which are not financial but still have an impact upon your quality and enjoyment of life. Understanding the potential risk for non-pecuniary loss is important to both how you construct a contract in the first place and how you recover damages after a breach. 

Often plaintiff’s are unaware that they may be able to claim damages of this nature as they are not as obviously related to a breach of contract. While pecuniary losses tend to be objective and easily quantifiable, non-pecuniary losses are usually subjective. This makes it difficult to quantify them when recovering damages. Non-economic loss is defined as the following under Section 3 of the Civil Liability Act 2002 (NSW)

  • pain and suffering;
  • loss of amenities of life; 
  • loss of expectation of life; 
  • disfigurement.

It tends to be more difficult to claim non-pecuniary losses that stem from a breach of contract. There are a number of limitations which apply. It is easier to recover damages if an important aspect of the contract in breach is the satisfaction of the parties and their protection from distress. It is important to note that these categories do not operate in isolation, and there is significant overlap. This means that you can claim for loss under multiple categories simultaneously.  

What are my legal options? 

The consequences of a breach of contract are not always confined to economic losses for your business. This is particularly true for small business owners. It can have a lasting impact on your overall quality of life outside of your work. This is why it is critical to understand the role which non-pecuniary damages play in recovering compensation. If you have suffered high amounts of stress, illness or injury as a result of a breach, it is important to understand you may have a legal right to compensation as a result.

Because this is an incredibly complex area of law, and requires you to prove how these losses will meaningfully impact your life, not just your business we recommend that you seek advice from a legal professional. For any query regarding what kind of compensatory damages you have a right to because of a breach of contract, Lawpath has a pool of experienced lawyers who are experts in contract law ready to assist you.

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Romaan Dulloo

Romaan is a Legal Technology Intern at Lawpath. He is currently studying a Juris Doctor at the University of New South Wales. He is interested in Cyber Law, Public Law and how the law will begin to adapt to the new challenges posed by the development of new technology.