In a series of ongoing posts, we've been discussing how a key element of running a successful business is a commitment to detail, meaning a willingness to ensure every matter crucial to efficient and efficient operation -- no matter the size -- is handled with the necessary care. Applied to contracts, this means a concerted effort to ensure compliance and dealing only with reliable parties.
We also discussed, however, that even the most conscientious business owners can still find themselves embroiled in a contract dispute despite these efforts. Given this reality, we've discussed breaches of contract and, most recently, some of the remedies available to non-breaching business owners. We'll conclude this discussion in today's post.
To recap, the three primary remedies for aggrieved parties under contract law include specific performance, damages, and cancellation and restitution.
What does cancellation and restitution entail?
In the event a party has provided some manner of benefit to another party who subsequently fails to comply with the terms of the contract, the non-breaching party may elect to cancel the contract and file a lawsuit seeking restitution.
As to the meaning of these terms, cancellation simply means the contract between the two parties is voided, such that either side is relieved of all obligations set forth therein. Restitution means that the non-breaching party is restored to the same position it occupied prior to the breach.
What about damages?
It's important to establish at the outset that contractual damages are an extremely complex topic to which a considerable body of law has been dedicated. As such, a complete explanation is clearly beyond the scope of a single blog post.
In general, however, some of the damages that a non-breaching party may be awarded in a breach of contract lawsuit, include:
- Compensatory damages: An amount designed to put the non-breaching party back to their position pre-breach
- Liquidated damages: A specific and reasonable amount previously determined in the terms of the contract to be awarded in the event of a breach
- Punitive damages: Payment the breaching party must make in addition to the amount required to compensate the non-breaching party (typically meant to serve as punishment for egregious conduct, but seldom awarded in the context of business contracts)
- Nominal damages: A small amount awarded to the non-breaching party when a breach, but no accompanying monetary loss, is proven
Here's hoping the foregoing conversation has proven enlightening. If you have concerns about a possible breach of contract or other business law concern, consider speaking with an experienced legal professional.