When one business fails to meet the terms of a contract, the other party may suffer financial losses or disruptions. A breach of contract can lead to serious consequences, but legal remedies are available to help rectify the situation.
Below are some of the most common legal remedies for breaches of business contracts.
Monetary damages
The most common remedy for a breach is monetary compensation. This can include:
- Compensatory damages: These cover the actual losses caused by the breach.
- Consequential damages: These apply if the breach causes additional indirect losses.
- Liquidated damages: These are agreed upon in the contract itself and are enforceable if reasonable.
The goal is to put the non-breaching party in the position they would have been in if the contract had been honored.
Specific performance
Sometimes, money is not enough to fix the problem. In those cases, a court may order the breaching party to carry out their end of the agreement. This is called “specific performance.” It is often used when the subject of the contract is unique, such as a piece of real estate or rare goods.
Cancellation and restitution
If a breach is serious, the non-breaching party may choose to cancel the contract. This ends the agreement and may allow that party to recover any money or property given under the deal. This is known as restitution. It helps restore both parties to their original positions.
Business disputes can be complex, and every breach of contract is different. The appropriate remedy will depend on the terms of the agreement, the nature of the breach and the impact on both parties. Having experienced legal guidance can help businesses protect their contractual rights.