TL;DR / Key Takeaways:
When someone breaks a contract, it’s called a “breach,” and several legal remedies are available to fix the problem. The most common remedy is compensatory damages, where the party harmed by the breach is paid money to cover their losses. Other treatments include specific performance (forcing the breaching party to do what they promised), rescission (canceling the contract), or even a legal injunction (stopping them from continuing to break the contract). Liquidated damages may also be awarded if the contract specifies a pre-agreed amount of compensation. Finally, nominal damages can be given when a breach occurs, but no actual harm is done. Understanding these remedies helps you know your options if you ever face a breach of contract. However, always consult a legal professional for personalized advice.
Disclaimer: This article is for informational purposes only and does not constitute legal advice. If you are dealing with a breach of contract, it’s best to consult a legal expert for guidance tailored to your specific situation.
In legal terms, breaking a contract can hurt the other person, leaving them at a loss. Depending on the situation, the law provides a few different remedies (or ways to make things right). These remedies ensure that the person who was wronged either gets what they were promised or is compensated.
Compensatory Damages in Contract Law
Compensatory damages are like the law's saying, “Let’s make this right.” When one party breaches a contract, compensatory damages are meant to restore the injured party to the position they would have been in if the contract had been performed as promised.
Expectation Damages
Expectation damages are the most common form of compensatory damages. They aim to put the wronged party in the same position they would have had if the contract had been fulfilled. It’s like saying, "If everything had gone according to plan, you would have had this much money or benefit." For example, let’s say you hired someone to build a website for your business. You paid them, but they never delivered the website. Expectation damages would cover hiring someone else to make the site.
Buyer’s Remedies for Breach of Contract
Let’s say you bought a car, but the seller didn’t deliver it, or they delivered something completely different from what was promised. As a buyer, you can ask for your money back or a similar product that matches the original promise. Depending on how the breach affects you, you could also claim for any extra costs you’ve had to pay because of the seller’s mistake.
Consequential Damages
Consequential damages go beyond what’s directly lost in the breach. They cover any additional harm or loss that happened because of the breach. Imagine if a caterer didn’t attend a wedding, causing the bride and groom to scramble for last-minute (and much more expensive) food options. Consequential damages would cover the cost of the missing caterer and the additional expenses caused by their no-show.
Specific Performance as a Contract Remedy
Sometimes, paying money just isn’t enough. Specific performance is when the court orders the breaching party to do exactly what they promised to do in the contract. This remedy is usually used when money can’t entirely fix the problem, like in real estate deals where a specific property is unique. If you agreed to buy a one-of-a-kind painting and the seller refused to hand it over, a court could order the seller to deliver the painting rather than just pay damages.
Specific performance isn’t always available, though. The court will only grant it when it’s clear that the item or service is unique and can’t easily be replaced with something else.
Legal Injunctions in Contract Disputes
An injunction is like a court’s “stop sign.” It’s a legal order that tells someone to stop doing something that breaks a contract. For example, if someone signed a non-compete clause in a job contract but then started working for a direct competitor, a court might issue an injunction to stop that person from continuing to violate the agreement.
Injunctions are powerful tools because they can stop a breach before it causes further harm rather than waiting for the damage to happen.
Rescission for Material Breach of Contract
In some cases, a breach is so serious that the injured party just wants to walk away from the contract entirely. This is where rescission comes in. Rescission cancels the contract and releases both parties from their obligations. It’s like hitting a reset button, as if the contract never existed in the first place.
This remedy is typically used when there’s a material breach—one that’s so significant that it undermines the very foundation of the contract. If you hired someone to paint your house blue but they painted it neon pink instead, you might seek rescission so you can hire someone else to do the job right.
Liquidated Damages in Contract Cases
Sometimes, contracts include a pre-agreed amount of money that one party has to pay if they breach the contract. These are called liquidated damages. They’re sort of like a built-in remedy to avoid lengthy court disputes. For instance, if a builder agrees to finish constructing a house by a certain date, but fails to meet that deadline, the contract might specify a set dollar amount they have to pay for every day the project is delayed.
The key with liquidated damages is that they must be a reasonable estimate of the loss likely to occur from the breach, and not a punishment. If they’re too high, the court may refuse to enforce them, calling them a “penalty.”
Awarding Nominal Damages in Contract Violations
What if a contract is breached, but no one suffers any real harm? This is where nominal damages come in. Nominal damages are a small amount of money (sometimes just $1) awarded to recognize that a breach occurred, even though there was no significant financial loss.
While nominal damages don’t amount to much financially, they do serve an important legal purpose by affirming that a breach took place and that the injured party was right in bringing the case to court.
Private investigators play a key role in supporting breach of contract cases by providing the concrete evidence needed to pursue remedies such as specific performance or liquidated damages. Many of these remedies can be hard to secure without proper evidence in court. Whether it's proving that a material breach occurred or tracking down hidden assets after a breach, thorough investigation is crucial for enforcing these legal remedies.
