6 Common Legal Remedies for Breach of Contract

Meaning of a Contract

A contract is a binding agreement between two parties to perform an obligation. The parties in a contract are the offeror and the offeree. The offeror makes the offer to the offeree and the offeree accepts the offer.

For there to be a breach of contract there must be a binding agreement in existence. Breach of contract lawyers are experts in determining if there is a breach of contract. In so doing, they examine if there exists a valid binding contract to be breached. It is important to understand the meaning of a contract to give context to its legal remedies for a breach.

For a contract to be binding there must exist the following basic elements:

  1. A valid offer made by the offeror to the offeree
  2. An unequivocal acceptance of the offer by the offeree
  3. Both parties to the contract must have the intention to create legal relations, that is, for the contract to be legally binding on them.
  4. The parties must furnish consideration. Consideration can be monetary or anything of value. For example, the offeror offers to sell his watch to the offeree and the offeree makes the payment for the watch. The offeror furnished consideration by selling his watch and the offeree by paying.
  5. The parties must have consensus ad idem. That is, there is an agreement by the parties on the subject matter of the contract.
  6. The parties must be competent and have the legal capacity to make a contract. This includes medical fitness, age, and financial capacity.

There is a legally binding contract when all these elements are present.

Factors That Terminate a Contract

Other factors can terminate a contract apart from breach of contract. They include the following:

  1. Misrepresentation

This is making a false statement of fact to make a party enter into a contract. The statement made must be of fact or law only. The aggrieved party must have relied on the statement to be true for it to amount to misrepresentation.

  1. Mistake

The mistake should make it impossible for the contract to be performed.

  1. Duress and undue influence

This is where a party enters into the contract under coercion or undue influence. Ordinarily, the party would not have entered into the contract but for duress. Duress could involve threats, violence, or any form of pressure to coerce a party’s consent to enter a contract.

  1. Illegality

Contracts made for illegal purposes are not enforceable under the law. Thus, such contracts are not valid.

Remedies to a Breach of Contract

The breach of contract law protects the sanctity of a contract and as such provides legal remedies for breach. There are various common legal remedies for breach of contracts.

Before a remedy is granted to an aggrieved party some things will be put into consideration such as the terms of the agreement, the circumstances of the case as well as the cause of the breach. Some legal remedies available under the law include the following:

  1. Compensatory Damages

This is the most common award for breach of contract. The court takes into consideration losses sustained before granting this award. The losses sustained must be a result of the breach of the contract. There are two categories of compensatory damage namely:

  • Expectation damages

This is also called general damages. It is a result of the loss suffered directly from the breach of contract. For example, Mr. A enters into a contract with Mr. B to buy 20 pieces of farming equipment for $500,000. Mr. B refuses to sell the equipment and decides not to go on with the contract. Mr. A finds another seller to supply the equipment but for a price not less than $520,000. The expected damage Mr. B gets from Mr. A will be the $20,000 difference from the initial contract price.

  • Consequential damages

This is a result of the consequence of breaching the contract. For example, the profit you could have made if there was not a breach of contract. It is very important to involve a breach of contract lawyer. This prevents the party at fault from giving the excuse that the consequential loss is not foreseeable.

  1. Specific performance

This is the court ordering the party at fault to perform their obligation in the contract. This is usually ordered when the contract involves an obligation unique to the breaching party. 

  1.  Injunction

An injunction is somewhat like a specific performance. Injunction restrains a party from doing a particular act. Specific performance orders a party to do a particular act. It could be a permanent or temporary injunction. A permanent injunction is usually ordered by the court as part of the final judgment. A temporary injunction is ordered to restrain the breaching party before the completion of the case.

  1. Rescission

This puts the parties back in the position they were in the beginning. The original position they were in prior to the contract. The aggrieved party is allowed to rescind the contract as a remedy for breach of the contract. For rescission to be ordered, the terms of the contract breached must be the central reason for the agreement.

For example, you agree to provide catering services for an office party. The terms of the contract require half the contract price to be paid at the start of the contract to buy the ingredient for the food. The other party never pays. You can rescind the contract because payment is pivotal to fulfilling your obligation to the contract.

  1. Liquidated damages

This is the amount agreed to by the parties for compensation in case of a breach of the contract. The court will not uphold the liquidated damages agreed to by parties only if it is not commensurate to the harm suffered.

  1. Reformation

Reformation is the power of the court to change the terms of the contract to reflect the intent of the parties. Rather than terminating the contract, the terms of the contract are changed to better suit the parties. This remedies the loss suffered from the breach as well. The Supreme Court in Jensen vs. Miller states the following elements must be present for the court to grant reformation:

  • There is an agreement that can be reformed.
  • There is a mistake occasioning the reformation.
  • The party seeking reformation is not negligent.

Final Thought

Where the agreements made between parties are not kept, this occasions breach. This is a legal cause of action and can be remedied in court. Thus, parties should honor their parts of the contract to avoid the consequences of breaching the contract.

Christopher Stern

Christopher Stern is a Washington-based reporter. Chris spent many years covering tech policy as a business reporter for renowned publications. He has extensive experience covering Congress, the Federal Communications Commission, and the Federal Trade Commissions. He is a graduate of Middlebury College. Email:[email protected]

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