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Contract law: what are some remedies if a contract is breached?

Business owners in California enter into contracts every day. In fact, contracts are often the backbone of many businesses, who rely on suppliers, employees and purchasers to keep their doors open. It would be nice if all parties to a contract would fulfill all their duties, but unfortunately this doesn't always happen. When a party fails to uphold their duties in a contract, it is referred to under contract law as a "breach of contract." There are several legal remedies that may be sought if a contract is breached.

One remedy is to pursue damages through a lawsuit. Some damages are compensatory, meaning that their purpose is to place the party that did not breach the contract in the position it would have been if the terms of the contract had been fulfilled. Some damages are punitive, meaning that they amount to more than what the compensatory damages would be. They are meant to punish the breaching party. Some damages are nominal, meaning they are simply a token award made when there were no actual monetary damages. Finally, some damages are liquidated, meaning that they are the compensation provided for per the terms of the contract itself.

Another remedy is specific performance. This may be an option if the subject of the contract is so unique that monetary damages would not be enough to compensate the non-breaching party. Specific performance can then be ordered by a court, so that the breaching party must meet their obligations per the terms of the contract.

Finally, there is cancellation and restitution. In this type of remedy, the non-breaching part is allowed to cancel the agreement and pursue a lawsuit for restitution. Essentially, this means the contract will be void and the non-breaching party would be placed back in the position it would have been in before the contract was entered into. The non-breaching party must have provided the breaching party with some sort of benefit to pursue this remedy.

As this shows, there a myriad of options to consider if a business is the victim of a breach of contract. Determining what course of action to take can be difficult, however, and this post cannot form the basis for any legal filing. Therefore, it may be wise to seek the advice of a business law attorney, so that you can make informed decisions.

Source: FindLaw, "Breach of Contract and Lawsuits," Accessed Sept. 11, 2017

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