A contract breach can cause unimaginable losses, and it is only fair that you are compensated for your losses. Fortunately, remedies that can help cure the breach and protect your financial interests are available.
The appropriate remedy varies depending on the terms of the contract, the nature of the breach and each case’s unique circumstances. That said, below are four common remedies you may be entitled to following a breach of contract:
Compensatory damages
You may be awarded compensation for the direct and indirect losses you suffered from the contract breach. Compensatory damages are supposed to make you whole again as you would have been had the contract been performed.
1. Specific performance
When monetary damages are insufficient to compensate you, the court may order the party in breach to proceed with the contract as planned. Specific performance is suitable when the object of the contract is unique and irreplaceable and no other remedy can compensate you.
2. Injunction
An injunction works more or less like specific performance, only that in this case, the court prohibits the party from a particular act or compels them to do something. For instance, they may be ordered to stop acting in a way that breaches the contract.
3. Rescission
Rescission as a remedy allows you to free yourself from any contractual obligations if the other party breached the contract instead of seeking monetary damages.
4. Liquidated damages
These damages are mutually agreed upon and specified by the parties to a contract before signing it. Liquidated damages mainly apply in contract breaches involving intangible or hard-to-define losses. However, they are not penalties and are relative to the harm incurred.
Safeguard your financial interests after a contract breach
Learning more about the available remedies and your legal rights is necessary to protect your business from potential losses following a contract breach. It will help you determine the best way of rectifying the harm caused by the breach.