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Remedies available for breach of contract

Many people who have worked business are likely aware of the role that contracts play in such an endeavor being successful. With such extensive use it is virtually inevitable that at some point a party will be unable to keep up its end of the deal. In these situations a business or individual might find it necessary to pursue a remedy to a breach of contract.

There are several ways in which a contract breach might be resolved. Sometimes an informal effort to resolve the matter will work. Other times, alternative dispute resolution via mediation or arbitration is effective. An alleged breach of contract might also be addressed in court after a lawsuit is filed.

When a breach of contract occurs, there are three possible remedies a non-breaching party might receive. The first is cancellation and restitution. This could be appropriate if the non-breaching party gave the other party a benefit and did not receive anything in return. Following cancellation of the contract the non-breaching party can seek restitution that places the party in the same place it was before the breach occurred.

The second remedy that might be available to a non-breaching party is specific performance. This is useful in situations where damages will not place the non-breaching party where it was prior to the breach occurring. Instead, the breaching party could be ordered to perform per the contract.

Last, damages may be sought. There are four types:

  • Compensatory damages-Damages that place the non-breaching party in the position it presumably would have been in if the breach had not occurred.
  • Punitive damages- These damages are meant to punish the breaching party and are over and above what would place the non-breaching party in the position it was prior to the breach.
  • Liquidated damages-these damages could be available if they were previously established in the contract that was breached, and are a reasonable estimate of the expected damages should a breach occur.
  • Nominal damages- Damages that are awarded to the non-breaching party when, despite the determination that a breach occurred, it is not proven that the non-breaching party actually suffered a monetary loss.

Though considered a part of doing business, breach of contract matters should be taken seriously. Accordingly, it is generally a good idea work with a lawyer when pursing a breach of contract claim.

Source: FindLaw, “”Breach of Contract” and Lawsuits,” Accessed Oct. 2, 2014

Mon Aug 27, 1:59pm

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