Unfortunately, the business world is not a perfect place and many obstacles are encountered. While many businesses in Louisiana are aware of this situation, it is possible to reduce the negative impact common business pitfalls cause. With regards to business contract issues, there are methods to remedy or resolve contract disputes.
What is a breach of contract? In the business world, a contract, when entered into, creates certain obligations between the parties of that contract. However, when a party fails to fulfill their end of the bargain, this is considered a breach.
Depending on the terms of the contract, a breach could occur at different times or in different situations. For example, this could occur when a party fails to perform on time, did not perform their duty in accordance with the terms of the agreement or the party failed to perform at all.
In order to determine the appropriate legal solution or remedy for the breach, a breach is either determined to be material or immaterial. This is based on the significance the breach has on the overall agreement and whether it could still be fulfilled.
How do you remedy a breach of contract? There are three major types of remedies for a breach of contract, which includes damages, specific performance or cancellation and restitution. The most common form of remedy used is damages, and depending on the type of breach this could include compensatory damages, punitive damages, nominal damages or liquidated damages.
If damages are not an adequate form of remedy, the non-breaching party could seek specific performance. This is described as a court ordered performance of the duty described in the contract. In other words, it forces the breaching party to perform the obligations of the contract. This usually occurs when the matter of the agreement is considered rare or unique.
Lastly, the non-breaching party could seek cancellation and restitution. This ultimately means that the contract is cancelled. Additionally, if the non-breaching party benefited the breaching party, restitution is provided so the non-breaching party is back in the position they were in prior to the breach.
This information is not exhaustive and is used only to briefly describe a contract breach and possible remedies. Therefore, it is important that parties to a contract dispute fully understand their situation as well as the resolutions available to them.
Source: Findlaw, ““Breach of Contract” and Lawsuits,” Accessed Nov. 2, 2015