If the other side suffers a loss because of a breach of contract, they are generally entitled to claim compensation. The amount of compensation reflects the damages caused.
Typically, a reasonable level of compensation might include any direct losses suffered as a result. It could also cover any foreseeable consequential losses. For example, suppose that your supplier fails to supply a component that you need in order to fulfil a contract with your own customer. If the supplier knew that this was why you needed the component, reasonable compensation might include the loss you suffer from losing this contract with your customer.
The level of compensation may be affected by what has been agreed in the contract. For example, the contract might include terms that limit the seller's liability (see question 12). Alternatively, the contract might specify the level of compensation to be paid in the event of a breach of contract (see question 20).
