No matter what kind of contract you’ve undertaken, there is a possibility that the other party will not carry through on their contractual obligations. When this happens, it is called a “breach of contract.” What remedies can you expect?
There are three basic remedies you can get in a breach of contract lawsuit:
- Monetary damages
- Cancellation and restitution
- Specific performance
Monetary damages are the most common remedy
In most cases, you will be seeking compensatory damages, which is an amount of money meant to “make you whole” after the contract breach. For example, if you were working with a home contractor and they failed to complete the project, you could sue for the amount it cost you to get the project done by another contractor.
You can seek compensatory damages through a lawsuit, but also through negotiation, mediation, arbitration or another alternative dispute resolution process.
There are three other types of monetary damages:
Nominal damages: a token amount awarded for a breach with little monetary loss
Liquidated damages: a predetermined amount of compensatory damages that the parties agreed to in the contract itself. These are usually an estimate of what the actual damages from a breach would be.
Punitive damages: An amount above the compensatory damages that is meant to punish wrongdoing
Sometimes, you would rather cancel the contract altogether
When a contract has been breached, the non-breaching party may decide it is in their best interest to simply cancel the contract. This can involve restitution to either party that has given a benefit to the other before the breach. The goal of restitution and cancellation, however, is to make the non-breaching party whole.
Sometimes you need the contract to actually be performed
Sometimes, damages, cancellation and restitution do not constitute an adequate remedy for the non-breaching party. In such cases, the courts have the power to order the breaching party to carry out their duties under the contract.
One situation in which specific performance could be available is when the subject matter of the contract is rare or unique. For example, suppose you had contracted to purchase a particular painting, but the gallery got a better offer and breached the contract. You could ask the court to order the gallery to sell you the painting you wanted at the contract price.
In addition to these three types of damages, there are also sometimes statutory damages, which are monetary damages ordered by state statute in some cases. And, the non-breaching party may be eligible to have their attorney’s fees paid by the breaching party in some cases.
If you are a party to a contract that has been breached, discuss your goals and options with an experienced attorney.