In our last post, we began a discussion about breaches of contract and how these issues can create serious legal problems for many different companies. And it isn’t just legal problems that come with a breach of contract lawsuit: the issue can ruin your reputation as a company and have indirect effects on your business.
Addressing claims of a breach of contract is imperative, and you will want to do so as quickly as possible. But how does a business fix a breach of contract? What sort of legal outcome “ends” a breach of contract dispute?
There are two schools of legal remedies that can be applied to a breach of contract case, and each school has a number of different types. The first is “remedies in law,” and they include:
- Compensatory damages and restitution. These forms of compensation are enforced by a judge who orders the breaching party to pay back the victimized party.
- Punitive damages. These are included in most cases where something morally-dubious occurred. An example would be a business selling defective products on purpose.
- Nominal damages and liquidated damages. These are forms of compensation that are awarded when no party is harmed by a breach of contract (nominal) and when both parties agree to an amount in the contract (liquidated).
There are also “remedies in equity,” which include:
- Cancellation. As the name implies, a judge would cancel the contract and free the parties from future obligation.
- Specific performance. This is when a judge forces the breaching party to fulfill its end of the contract.
Source: FindLaw, “What Is the Most Common Legal Remedy for a Breach of Contract?,” Accessed March 31, 2017