When one party fails to live up to the terms of a contract, that party is said to have breached the contract. When a contract is breached, the non-breaching party has several remedies at its disposal. One option is to cancel the contract and another is to ask for restitution. If the contract is cancelled, neither party has any further obligation to the other. If the non-breaching party decides to seek restitution, the breaching party would have to pay to put the other party back to the position it was in prior to the breach. There are several different types of damages that may be awarded to the non-breaching party. For instance, nominal damages are awarded when breach occurs but there is no evidence that a monetary loss occurred. Compensatory and liquidated damages aim to put the non-breaching party in roughly the same position that they were in before the breach occurred. In the event of a severe breach, punitive damages may be awarded on top of any other damages sought in court. Another option may be to seek specific performance remedy. This occurs when a financial payment wouldn’t be enough to put the non-breaching party in the position it was in before the contract was signed. A specific performance remedy is rarely sought by parties that are damaged by a breach of contract. During a contract dispute, it may be beneficial to have legal counsel available. An attorney may be able to review the case to determine if the breach was material and if going to court to seek damages may be worthwhile. In many cases, the attorney may advise a business owner to settle the case outside of court during informal settlement negotiations.
