When a party your business has a contract with commits a breach, your company can suffer significant financial damages and other drains. If you and the party cannot work out a solution on your own, it may be necessary to take the matter to court.
Whether to pursue litigation for breach of contract is not a decision to take lightly. One thing to consider is what your goals are. What do you need from the other party to make your business whole again?
The law provides for several types of remedies for a breach of contract. Some of them involve financial damages, but others compel the breaching party to do — or not do — something.
For instance, compensatory damages exist to put the plaintiff business to the position it would have been in had the breach not have occurred. Sometimes, the court will find that the defendant breached the contract, but that the plaintiff suffered no actual losses. In that case, the plaintiff may receive only nominal damages, a token amount that acknowledges the breach but is only a small amount of money.
Many contracts have clauses that set out what the damages would be if one of the parties commits a breach. This is known as liquidated damages. Liquidated damages should be reasonable.
Now for remedies that do not directly involve a financial award. Specific performance is the legal term for the remedy that involves the breaching party performing a duty under the contract.
For example, say A agreed to fix B’s fence, but failed to do so. B sues A for breach of contract, and prevails. The court orders A to fix the fence.