Monetary judgments: Overview, definition, and example
What are monetary judgments?
A monetary judgment is a legal decision by a court that requires one party to pay a specific amount of money to another party as compensation for a loss, injury, or breach of contract. This judgment typically follows a lawsuit or legal claim where the court determines that one party is owed money. Monetary judgments are enforceable by law, meaning the party that is owed the money has the right to take legal steps to collect the amount awarded.
In simple terms, a monetary judgment is a court’s way of saying, "You owe this amount of money because of a legal issue," and it orders the payment to be made.
Why are monetary judgments important?
Monetary judgments are important because they provide a legal resolution to financial disputes, ensuring that individuals or businesses are compensated when they’ve suffered a loss due to someone else’s actions. Whether it’s due to a breach of contract, personal injury, or property damage, a monetary judgment is the way the courts ensure that the responsible party makes the injured party whole again by paying the amount they’re owed.
For SMB owners, understanding monetary judgments is essential for both seeking compensation when your business is wronged and protecting your business from being on the receiving end of such judgments. If your business is sued and a monetary judgment is made against you, you’ll be legally required to pay the amount determined by the court.
Understanding monetary judgments through an example
Imagine a small business owner, Sarah, enters into a contract with a supplier. The supplier fails to deliver the goods as promised, causing Sarah’s business to lose sales. After trying to resolve the issue without success, Sarah takes the matter to court. The court rules in her favor and issues a monetary judgment, ordering the supplier to pay Sarah $10,000 in damages for the lost sales and the inconvenience caused by the breach of contract.
In another example, suppose a car accident causes damage to a business vehicle. The business owner, John, sues the driver at fault for the damages. After the court hearing, the judge issues a monetary judgment against the driver, requiring them to pay $5,000 for the repairs to John’s vehicle.
Example of a monetary judgment clause
Here’s how a monetary judgment clause might look in a contract:
“In the event of a breach of this Agreement, the breaching Party agrees to pay the non-breaching Party all costs, damages, and legal fees incurred, in addition to any monetary judgment awarded by a court of competent jurisdiction. The Parties agree that the amount of the monetary judgment will be determined by the court and enforced accordingly.”
Conclusion
Monetary judgments are a crucial part of resolving financial disputes and ensuring that parties are compensated for losses or damages caused by another’s actions. For SMB owners, understanding how monetary judgments work can help you navigate legal issues, whether you need to seek compensation or protect your business from being liable for a large sum.
Being aware of how monetary judgments are issued and enforced ensures that you can effectively manage legal risks, maintain business relationships, and comply with court decisions if you’re involved in a legal dispute.
This article contains general legal information and does not contain legal advice. Cobrief is not a law firm or a substitute for an attorney or law firm. The law is complex and changes often. For legal advice, please ask a lawyer.