The legal process encourages parties to freely contract with one another for the mutual benefit of the parties. Contracts are important for many businesses, business relationships and the health of the businesses in question. At times circumstances may change in a business relationship and a business may find itself facing a breach of contract which can be devastating to a business, making it important to know how to respond.
A breach of contract occurs when one party fails to honor its obligations under a contract. Contracts set up rights and responsibilities between the parties, as well as performance and obligations. If one party fails to perform its obligations under a contract, it is important for the other party to know how to enforce the contract if necessary and what remedies may be available to help with the damages caused by a breach of contract. In general, contract breaches are divided into categories which can impact the nature of the remedies available so it is important to be familiar with what they are.
Remedies for a breach of contract depend on the circumstances but can include damages, specific performance of the contract or cancellation of the contract. In general, the most common type of damages for a breach of contract are compensatory damages to compensate the non-breaching party for the harm caused by the breach. Additional types of damages, however, may be available including liquidated damages or punitive damages in some circumstances.
It is important for the non-breaching party or business to know how they want to respond to a breach of contract such as by filing a lawsuit to enforce the contract or to seek damages for the breach. Being familiar with what to do if a contract has been breached can help alleviate some of the stress a contract dispute can invariably cause a business owner.
Source: Smallbusiness.findlaw.com, “Breach of Contract and Lawsuits,” Accessed April 12, 2018