Contracts are crucial in the world of business. They establish both parties’ role in a business transaction, stipulate each side’s obligations and set a timeline for the business matter at hand. A well written, legally binding contract can provide peace of mind for all parties involved.
However, this does not mean that breaches of contract will never occur. Sometimes, it seems that no matter how strong the contract, how good the relationship with the other party or how simple the business arrangement, someone will violate the contract. When a breach of contract does occur, there are a few ways to remedy it.
Remedies for a breach of contract
There are three main remedies for a breach of contract:
The most common resolution is for the party that breached the contract to pay damages to the other party. Damages can be compensatory, punitive, nominal or liquidated.
- Specific performance
But damages do not always work as a remedy. When the breaching party still owes a service, the non-breaching party can seek a remedy called specific performance. This is when a court mandates that the first party fulfill its contractual obligation to the other signatory.
- Cancellation and restitution
It is also possible for the non-breaching party to cancel the contract and pursue civil action for restitution. Generally, this option is only pursued when remedying a breach of contract with monetary damages or specific performance is not a good option.
Resolving a breach of contract
When one party violates a business contract, the ramifications of the breach can be severe. The fallout can cost time, money and effort that could be much better used. It is important for any party whose business contract has been breached take advantage of their legal options. There is legal recourse for breach of contract that can recoup your losses and obtain the remedy that is best for your company.