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Remedies in the wake of a breach of contract

As we have discussed on this blog before, contract disputes are complicated, but important, pieces of business litigation. Companies that enter into contracts (usually) have the best of intentions. However, unforeseen circumstances or logistical complications can make it difficult, if not impossible, for one party to fulfill its end of the contract. This is where a breach of contract can occur.

When a victimized company files a breach of contract lawsuit, they are obviously looking for some kind of enforceable resolution to the dispute. But in a tangible sense, what does this mean? What are the actual remedies for a breach of contract dispute?

There are two categories to remedies for a breach of contract. The first is "remedies of law," and this usually means financial compensation:

  • Compensatory damages are the most common, and this involves a court ordering one party to pay the other party to fulfill the contract.
  • Restitution is very similar to compensatory damages, depending on the circumstances.
  • Punitive damages are awarded in cases where something morally-reprehensible has occurred.
  • Nominal and liquidated damages can also be awarded. These are damages that are awarded when a breach occurs but no one is harmed (nominal) and damages that are referenced as part of the contract when the breach occurs (liquidated).

"Remedies in equity" consist of the second way that a breach of contract can be resolved:

  • Cancellation occurs when a court voids a contract, meaning neither side is bound to it any longer.
  • Specific performance is when a court orders the breaching party to fulfill their side of the contract.

Source: FindLaw, "What Is the Most Common Legal Remedy for a Breach of Contract?," Accessed March 30, 2017

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