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What options do you have after a breach of contract?

Unexpected events can lead one party or another to breach their contracts. If this has happened to you, you may be wondering what legal rights and options you may have. When a contract dispute arises, you can try to resolve it through negotiation, mediation, arbitration or litigation. Whatever method of dispute resolution you use, you should consider the expected outcome in litigation.

What remedies are available in a breach of contract lawsuit?

The main remedy for contract breach is monetary damages, but this is not the only remedy. Courts can also order “specific performance,” which is an order to comply with the terms of the contract. Or, in appropriate cases, the court may order cancellation of the contract with restitution for any money already paid out.

There are three main types of monetary damages available in a lawsuit: Compensatory, punitive and, depending on the contract, liquidated.

Compensatory damages are meant to bring the non-breaching party to a place equivalent to where they would have been if the contract had been fulfilled.

Punitive damages are meant to punish wrongdoing. They are payments made by the breaching party over and above damages meant to compensate the non-breaching party. These are rarely awarded in business disputes.

Liquidated damages are when the parties to the contract identified the likely damages if the contract were breached and put that estimate in the contract itself. These are often specified when determining the actual damages would be burdensome, but they should be a reasonable estimate.

In addition to these three main types of damages, there are also nominal damages, which are a token amount awarded when the breach was serious but not particularly costly. Also, there may be statutory damages, where a specific amount in damages is specified in a statute.

If damages will not be adequate, the non-breaching party can ask the court to order the breaching party to fulfill the contract. A common example of this is an art sale. If a gallery owner was paid $250,000 for a particular painting, she should not be allowed to breach the contract and sell to a higher bidder once the contract is in place. Instead of having her return the $250,000, the court could order her to produce the painting in question.

The non-breaching party may also ask the court to cancel the contract. In such a case, if either party had expended money towards fulfillment of the contract, that party would receive restitution for the money they had expended.

If you are experiencing a breach of contract, discuss your concerns and goals with an experienced business attorney. Your attorney can help you identify the most appropriate remedy and begin the process of resolving the dispute.