Breach of Contract Lawsuit Basics

Contract (2)In an ideal world, when you enter a contract both parties would fulfill their obligations and be satisfied with the outcome. Unfortunately, the reality is that there are many factors that can cause contracts to be breached. Delays happen, unforeseen financial problems occur, and other unexpected events can hinder or even prevent a successful contract from being carried out.

When a party to a contract fails to fulfill its obligations under the agreement, it is referred to as a “breach” of the contract. A breach can be considered “material” or “immaterial,” which impacts the legal remedies available for the other party to the contract.

When a contract dispute arises, the parties may try to resolve it between themselves. The contract may have a provision that requires the parties to attempt mediation before filing a lawsuit, or it may require the parties attend a binding arbitration. Depending on the complexity of the business transaction and the circumstances involved, a lawsuit is often necessary.

There are a variety of remedies available for the party harmed by the breach of contract. The primary remedies include:

  • Damages. Payment of some type is the most common remedy used in a breach of contract action. There are different types of damages available. COmpensatory damages seek to make the non-breaching party whole or in the same position that party would’ve been in had the breach not occurred. Punitive damages are awarded when the breaching party is being punished for especially wrongful conduct. Nominal damages are awarded when there was a breach, but the non-breaching party was unable to prove actual monitary loss resulting from the breach. Liquidated damages are defined damages identified in the provisions of the contract.
  • Specific performance. If damages are not an adequate remedy, the court may order the breaching party to perform an action. This is called “specific performance.” This may be used when the subject of the contract is rare or unique and a monetary award would not make the non-breaching party whole.
  • Cancellation and Restitution. A non-breaching party may cancel the contract and file a lawsuit seeking restitution for any benefit already given to the breaching party.

If you have questions regarding a breach of contract matter or any other business law matter, contact the attorneys at The Swenson Law Firm.


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