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The Difference between Positive and Negative Damages
A creditor who does not wish the specific performance of the
obligation may claim compensation for positive damages by waiving
the specific performance or compensation for negative damages
incurred by rescinding the contract, provided that he complies with the
conditions mentioned above.
Positive damage is damage incurred by the creditor because the
obligor has not performed his obligation or has not performed as
required. Positive damage is the difference between the creditor’s asset
and the consequence of non-performance of the obligation, or the per-
formance of it but not as required, and the assumption as to how his
asset would benefit if the obligation had been performed in compliance
with the contract. Therefore, the legal interest protected by the com-
pensation of positive damages is the creditor’s interest in the perfor-
mance of the obligation.
It is accepted in decisions of the Turkish Court of Cassation that
lost profit is one of the causes for positive damages. This refers to the
loss occurred due to the fact that the obligor did not perform his oblig-
ation, or has performed it but not as required and that the creditor had
to procure the same product or service from another source. Expenses,
such as for a notary, of time granted, other related expenses and those
incurred by the creditor for having to replace the non-performed con-
tract with another, constitute examples of positive damages.
On the other hand, the notion of negative damage refers to losses
by the creditor in relation to his reliance on the validity of the contract.
Negative damage is the difference in the creditor’s asset in the period
after the contract was rescinded and the presumed state or condition of
the asset had the parties never entered into such contractual relation-
ship. Thus, the legal interest protected by the compensation of negative
damages is the creditor’s reliance on the validity of the contract.
Examples of negative damages include any kind of expenses relat-
ed to the conclusion of the contractual relationship (such as fees and
stamp tax payments, travel expenses, notary expenses, etc.), expenses
incurred because of the return of obligations already performed within
the scope of the rescinded contract and lawsuit expenses. Among legal
scholars, it is generally admitted that the losses incurred from missing
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NEWSLETTER 2014