Road to resolution: Understanding remedies for breach of contract

When parties sign a contract, they do so with high hopes and expectations, trusting that the agreement will be honored. However, there are instances when these expectations are shattered due to avoidable or unavoidable reasons, and a breach of contract occurs.

In such situations, understanding the available remedies becomes crucial in navigating the road to resolution. From compensation to specific performance, below is a list of common contractual remedies that can help mitigate your losses in the wake of a contract breach.

Compensatory damages

One of the most common remedies for breach of contract is awarding damages. Picture it as a financial lifeline thrown to the injured party, aiming to compensate for the losses from the breach.

Damages come in many forms depending on the breach. For example, general damages aim to restore the injured party to the position they would have been in had the breach not occurred. Special damages account for indirect losses resulting from the breach, while punitive damages are awarded in cases of gross misconduct by the breaching party.

Specific performance

Monetary compensation may not be enough to make amends for a breach. In such cases, specific performance may be sought. This remedy requires the breaching party to fulfill their contractual obligations as originally agreed upon. In other words, it is a way to recreate the promised outcome and restore the parties to the position they would have been in had the breach not occurred.

Rescission

This remedy nullifies the contract, treating it as if it never existed. Rescission is typically sought if a material breach that goes into the heart of the contract occurred. It aims to eliminate any obligations or liabilities arising from the flawed agreement.

Restitution

The remedy of restitution requires the breaching party to return any benefit they have received from the innocent party under the contract. It is based on preventing unjust enrichment and can be granted in addition to or instead of other remedies.

Protect your interests after a breach of contract

If you are dealing with a contract breach, seeking legal guidance and understanding your options is highly advisable. The sooner you do, the easier it will be to handle the situation as efficiently and effectively as possible.