Direct damages are best described as which of the following?

• A. The sum of all damages including indirect damages
• B. Costs to sue and attorney fees
• C. The gap between promised performance and what was received
• D. Punitive damages awarded for breach

Answer: (C)

Direct damages measure the actual loss from a breach by restoring the nonbreaching party to the position they would have been in if the contract had been performed. The standard measure is the gap between what was promised and what was received—the difference in value between the promised performance and the actual performance. This focuses on the direct, immediate consequence of the breach.

This differs from indirect or consequential damages, which cover additional losses that arise from special circumstances and were foreseeably caused by the breach. It also differs from punitive damages, which punish wrongful conduct rather than compensate for breach. Attorney fees or costs to sue are recoverable only if the contract or law provides for them, not as direct damages. Therefore, the description that best fits direct damages is the difference between promised performance and what was received.