When a person or company enters in to a business contract with another person or company, each side is expected to hold up their end of the bargain. Failure to uphold your end is a breach of contract. In business law, a breach of contract can occur in many forms. For example, a breach of contract can occur when a party fails to perform their duties in a timely fashion or does not perform at all.
If a breach of contract occurs, the parties may attempt to resolve the issue outside of court. However, if they are unable to reach an agreement, a lawsuit may be filed. This will force the breaching party to perform their side of the contract or pay damages for the harm suffered as a result of the breach.
There are four main types of damages available in breach of contract cases. Compensatory damages are intended to put the plaintiff in the position they would have been in if the breach had not occurred. Sometimes the contracting parties will include specific damages in the contract in the event of a breach. These damages are called liquidated damages. Nominal damages refer to token damages that are given when it cannot be proven that the breach financially harmed the non-breaching party. Lastly, in rare cases, punitive damages provide a way for the breaching party to be taught a lesson. These damages are awarded beyond the amount needed to compensate the non-breaching party.
In some cases, specific performance may be a better remedy than damages. The court will order the breaching party to perform the duties assigned to them in the contract.
Finally, the non-breaching party may choose to cancel the contract altogether, voiding both parties contractual obligations. They may also request restitution which would put them back in the position it was in prior to the breach.
A breach of contract is a serious matter that will be taken very seriously in a court of law.
Source: FindLaw, "Breach of Contract and Lawsuits," accessed on Jan. 9, 2017