As Beverly Hills business attorneys, we realize how pleasant it would be if business agreements could be entered into without disputes cropping up – but that just isn’t how it happens in the real world. In the “ideal” situation, both parties would be satisfied with the outcome and thereby benefit from the agreement, but this is simply not always the case. There are many reasons a contract is not successfully carried out, including delays, unforeseen circumstances and financial issues.
What does ‘breach of contract’ actually mean?
When two or more parties enter into an agreement, there are specific obligations which are expected to be met by those parties (individuals or companies). However, when one or more of those parties fail to meet the express obligations, it is known as a ‘breach’ in legal terms. There are many actions (or even inactions) that can be considered a breach, depending on the terms of the agreement. A breach may occur when one of the parties does not perform according to the agreement’s terms, does not perform within the time guideline outlined in the contract, or simply fails to perform at all.
When a contract is breached, or allegations made that an agreement has been breached, either party or both may desire to enforce the terms of the contract or agreement, or recover financial compensation for losses which were a result of the alleged breach. This may be approached in a variety of ways from a legal standpoint including litigation, through mediation, binding arbitration, or other alternative methods of dispute resolution.
Examples of remedies or “relief” for breach of contract under the law
There are several remedies which may be awarded to one party by the other to settle a dispute over a contract that has been breached, including specific performance, damages, or cancellation of the contract or agreement and restitution.
Specific performance – when damages are not an option, the party who did not breach the contract may seek specific performance which simply means that the party breaching the contract may be ordered by the court to perform a specific duty so that the non-breaching individual or party essentially ends up in the position they were initially intended. This is usually only a remedy when the terms contained in the contract are unique or rare.
Damages – damages may be compensatory, punitive, nominal or liquidated, and are the most common remedy sought when a contract is breached. Essentially, the party who breached the contract will make payment in some form to the non-breaching party.
Cancellation and restitution – the contract or agreement may be cancelled by the non-breaching party; this party may then take action and file a lawsuit for restitution provided the party who breached the contract has been given a benefit by the non-breaching party. Cancellation essentially relieves both parties of all obligation, and voids the contract; restitution allows the non-breaching party to reclaim the benefit given to the breaching party, putting the non-breaching party back in the position it was in before the breach occurred.
For further explanation of breach of contract and legal options, contact the Beverly Hills business attorneys at the Law Offices of Spotora & Associates.