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Debt or Damages?

The Magistrates Court hears claims for damages as well as debts. Broadly speaking, damages are compensation for a loss suffered by one person as the result of another person's action or failure to act. Damages are claimed as an unliquidated amount, that is, an amount that cannot be precisely known in advance. For example, an owner whose car is damaged in a collision that was another driver's fault will claim damages for her or his loss. The amount of this loss will not have been agreed upon before the accident and must be claimed as damages equivalent to the cost of repairs. The owner will need to prove how much this should be.

If the claim is for damages, see the chapter COURT - SUING AND BEING SUED.

A debt, however, is a liquidated (i.e. known) amount that is owed by the debtor to the creditor. For example, if a builder quotes $500 to carry out repairs and the quote is accepted but the work is then not paid for, the debt is $500. This does not mean that the debtor and creditor must always have agreed on a fixed or specified amount before a debt can be said to be owing - it is enough that the amount owed by the debtor to the creditor can be stated precisely and objectively. If in the previous example there had been no prior agreement as to the amount to be charged for the work, a court would agree that there is a valid debt as long as the builder fixes an amount that is reasonable in the circumstances - say $500. The builder fixes the contract price retrospectively by setting a reasonable charge for the work.

Debt or Damages?  :  Last Revised: Mon Apr 29th 2013
The content of the Law Handbook is made available as a public service for information purposes only and should not be relied upon as a substitute for legal advice. See Disclaimer for details. For free and confidential legal advice in South Australia call 1300 366 424.