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What does compensation cover?

According to Polish law, damages are as a rule compensatory.

An assessment of damages in contract and tort law is based on the full compensation rule. The person obliged to pay damages is liable only for the normal effects of the act or the omission from which the damage resulted. Compensation is considered to be actual loss and loss of profits. Within the notion of actual loss (damnum emergens) we find all the damage that occurred and which can be evidenced. The loss of profits (lucrum cessans) includes all the benefits that could have been obtained had it not been for the act or acts complained of. Such benefits must, however, be shown to have been inevitable.

In more complex cases it is advisable to file an application for admission of expert evidence to support claims concerning an amount of damages in order to avoid a situation where the court considers gathered information to be insufficient in this respect.

Damages include interest. Contract law allows interest to accrue from the date when the cause of action accrued and in tort it accrues from the time a judgment was issued.

The parties can agree in a contract that in case of improper performance or non-performance of the contractual obligations one of them will be entitled to a contractual penalty in a specified amount regardless of the damage suffered. In such case the damages gain punitive character. The aggrieved party may demand damages exceeding the amount of the stipulated penalty only if such right is granted directly by the agreement of the parties.

It should also be noted that in some cases Polish law limits the damages to the so called negative contractual interest, i.e. to the damage suffered as a result of a party counting on the conclusion of a contract. This applies for example in the case of preliminary agreements and culpa in contrahendo (i.e. negotiating without an intention to conclude a contract despite promising to do so).