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Understanding potential remedies for breach of contract

On Behalf of | Oct 24, 2022 | Business Law

Your business contracts with various parties ensure the timely and accurate completion of multiple projects. However, a contract does not necessarily guarantee receipt of the goods or services you expect.

Fortunately, it is possible to pursue various remedies following a breach of contract.

What constitutes a breach of contract?

The following are common contract breaches and what they involve:

  • Anticipatory breaches occur when one party notifies the other of its likely inability to meet a contractual obligation and requests to renegotiate the contract.
  • Actual breaches occur when one party fails to meet the terms of a contract without notification to the other.
  • Material breaches arise when one party delivers incomplete or different goods or services from what the contract specifies.
  • Minor breaches involve the delivery of contractual goods or services after their agreed-upon delivery date or with minor unauthorized changes.

What are possible remedies for contract breaches?

Mediation can be a satisfactory solution for contract breaches. However, if this resolution method fails, you may pursue a lawsuit to fulfill or dissolve the contract. If dissolution occurs, you may receive compensatory damages for losses resulting from the breach or restitution to return your company to its pre-breach position. If your losses are negligible, the court may still award your business nominal compensation for the other party’s breach.

In rare instances, the court may award you punitive damages if the contract breach is willful, malicious, and leads to significant or irreparable harm.

Contract breaches can significantly harm any party relying upon another for goods or services. Ideally, your original contract will stipulate that a contract breach automatically results in the breaching party paying the other liquidated damages or an amount estimating potential damages. Ultimately, pursuing a remedy can mitigate potential damage to your company.