Remedies for Breach of Contract
Many states utilize a mix of statutory and common law to provide remedies for breach of contract. Depending on the contract and circumstances of the breach, you may have several basic choices of remedies. There are two general categories of relief for breach of contract: damages and performance. Damages involve seeking monetary compensation for a breach of contract. Performance involves forcing the other side to do what they originally promised in the contract agreement. An attorney that specializes in contract law can help you decide which direction is best for your breach of contract dispute.
Monetary Damages for Breach of Contract
Before you file a breach of contract lawsuit, you should know which type of remedy you are seeking. Many people simply want monetary compensation for the grief caused by the other party’s breach of contract. Types of damages for breach of contract include:
- Compensatory Damages - money to reimburse you for costs to compensate for your loss
- Consequential and Incidental Damages - money for losses caused by the breach that were foreseeable (foreseeable damages are when each side reasonably knew that--at the time of the contract--there would be potential losses if there was a breach
- Attorney Fees and Costs - only recoverable if expressly provided for in the contract
- Liquidated Damages - damages specified in the contract that would be payable if there is a fraud
- Punitive Damages - money given to punish a person who acted in an offensive and egregious manner in an effort to deter that person and others from continuing to act in this way. You generally cannot collect punitive damages in contract cases.
The controlling law, the conduct of the violating party, and the extent of harm you suffered can influence which of these damages for breach of contract will be awarded in your situation. The more egregious and intentional the behavior, the greater the chance you have of being awarded larger, punitive damages. If the breach was unintended and arose from negligent behavior, you will probably receive compensatory or consequential damages.
Requesting Performance of the Contract
Sometimes money just cannot fix the problem. Instead of asking for damages, you can also seek actual performance or modification of performance of the original contract. Performance remedies for breach of contract include:
- Specific Performance - a court order requiring performance exactly as specified in the contract; this remedy is rare, except in real estate transactions and other unique property, as the courts do not want to get involved with monitoring performance
- Rescission - the contract is canceled and both sides are excused from further performance and any money advanced is returned
- Reformation - the terms of the contract are changed to reflect what the parties actually intended
Pursuing Appropriate Remedies for Breach of Contract
Some of these remedies for breach of contract may be limited by the contract. Before you file a lawsuit, you should review your contract for any limitations or notice requirements contained within your contract so that you do not accidentally waive any contractual remedies. Enforcing a contract with a lawsuit can be expensive. Before you make a final decision on which remedy you want to pursue and how you intend to obtain it, you should consider the cost-effectiveness of full litigation. Instead of jumping into a lawsuit, it may make more sense for the parties to agree on a form of alternative dispute resolution such as direct negotiation, mediation, or arbitration. These avenues for obtaining a remedy may be more cost effective than simply filing a lawsuit and letting the court settle the dispute. Many communities now offer mediation and arbitration services for a nominal fee.
If the breach of contract dispute involves a significant amount of damages, a wise option would be to retain an experienced contract attorney to help you propose settlement terms and to review any proposed settlements in advance. They can also help you draft pleadings so that you do not omit requests for certain remedies which you are entitled to by law or by contract. Even if you do not use an attorney to file a lawsuit, you may want to consult with an attorney to help you draft and finalize settlement documents. If your settlement does not include the particular remedy for breach of contract that you were seeking, you can accidentally forfeit your right to those remedies or damages.