Incidental damages are best described as which of the following?

Incidental damages specifically refer to the expenses that a party incurs in an effort to mitigate losses after a breach of contract. This often involves costs related to finding a substitute performance from another source when the original contract is breached. For instance, if a supplier fails to deliver goods as promised, the buyer may incur costs by purchasing those goods from a different supplier. These additional expenses are necessary to address the breach and restore the party to a position as close as possible to what they would have been in had the breach not occurred.

In contrast, compensation for losses directly resulting from a breach typically encompasses direct damages or primary losses instead of the additional expenses incurred during mitigation. Punitive financial penalties are awarded not to compensate for loss but to deter wrongful conduct, while payments for wrongful actions without financial loss relate to non-economic damages, which are not the focus of incidental damages. Thus, the definition focusing specifically on expenses incurred in obtaining performance from another source accurately captures the essence of incidental damages.