Important Remedies for Breach of Contract

Important Remedies for Breach of Contract

Important Remedies for Breach of Contract

A breach of contract is a violation of any of the agreed-upon terms and conditions of a binding contract. A business contract creates certain obligations that are to be fulfilled by the people or companies who entered into the agreement.

When lawyers talk about “remedies in law”, they are talking about money damages. For breach of contract cases, there are several different types of monetary remedies:

(a) Compensatory damages: This is the most common breach of contract remedy. When compensatory damages are awarded, a court orders the person that breached the contract to pay the other person enough money to get what they were promised in the contract elsewhere. For example, suppose you hire and pay someone to clean your house for $100, but he is unable to do it. Your search for a new cleaning service and the cheapest one you find will clean your house for $150. If this cost is found to be reasonable, your first cleaner would have to pay you $150 in compensatory damages, allowing you to get your house professionally cleaned as the contract intended.

(b) Restitution: When a court orders restitution, they tell the person that breached the contract to pay the other person back. In the example above, the court would order the first cleaner to pay you back $100, since that’s what you paid him to dean your house.

(c) Punitive damages: This is a sum of money intended to punish the breaching, party, and is usually reserved for cases in which something morally reprehensible happened, such as a manufacturer deliberately selling a retailer unsafe or substandard goods.

(d) Nominal damages: A court awards nominal damages when there has been a breach contract but no party to the contract suffered any harm.

(e) Liquidated damages: These are damages that the parties agree to pay in the event contract is breached.

(f) Quantum Meruit: A court can award one party payment for what they deserve for any work that she performed before the other party breached the contract. For example, if the cleaner in the example above had cleaned half the house, and then you decided you didn’t want him to finish, he can demand $50 as quantum meruit. Translated from Latin, the term means “as much as he deserved.”

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