Breach of Contract

A contract case typically comes before a judge when one or both parties claim that the contract has been breached. 

A breach of contract is a failure, without legal excuse, to perform any promise that forms all or part of the contract. 

When there is a dispute, a lawsuit usually follows. If the lawsuit is determined to hold water, three possible remedies are presented. They are as follows:

Damages

Damages are payments in one form or another and are the most common remedy for a breach of contract. There are four types of damages:

1. Compensatory

These are damages that reimburse the non-breaching party for any out of pocket costs. Some examples include medical bills, lost wages, loss of earning potential, and even emotional distress.

2. Punitive

Punitive damages are those that exceed simple compensation. These are assessed to punish the breaching party for any malicious or fraudulent activity.

3. Nominal

These are damages awarded by a court when legal wrongdoing has occurred but when there was no actual financial loss resulting from that legal wrong.

4. Liquidated

Liquidated damages are an agreed upon amount of money established at the signing of a contract that describes what damages can be recovered in the event of a breached contract. This amount is intended to reflect the best estimate of actual damages when the parties sign the contract.

Specific Performance

If the damages paid are still not adequate as a legal remedy, the non-breaching party can seek an alternative remedy called specific performance. Specific performance is known as the breaching party’s court-ordered performance of a duty under the contract.

Cancellation and Restitution

There is also the possibility for a non-breaching party to cancel a contract and sue for restitution under the circumstances that the non-breaching party has given a benefit to the breaching party. Cancellation voids the contract and relieves parties of any obligation. Restitution places the non-breaching party back in the position that it was prior to the breach.