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What are the remedies for a contract breach?

On Behalf of | Nov 10, 2021 | Business Law And Litigation |

Legal disputes over allegedly substandard goods or services when small sums are involved are often resolved quickly in small claims courts, but breach of contract lawsuits can drag on for years in Texas and around the country when large sums are involved. In order to determine appropriate remedies in these cases, the court must decide if the alleged breach of contract actually occurred and whether it was serious enough to cause irreparable damage. When the preponderance of the evidence demonstrates a material breach occurred, the court may award monetary damages, cancel the contract to relieve the plaintiff of any remaining obligations or order the breaching party to perform the obligations (i.e. order specific performance).

Monetary damages

Monetary damages are awarded in breach of contract lawsuits to restore the plaintiff to the financial position they were in before the breach occurred. Nominal damages are awarded when legal matters are clear but the plaintiff did not lose any money, and compensatory damages are awarded when the plaintiff suffered harm. Some contracts contain liquidated damages provisions that can provide the court with guidance, but judges may reject them if they are unfair. In an appropriate case, the court may also award punitive damages if the defendant’s actions were particularly egregious.

Specific performance

When a judge orders specific performance in a breach of contract case, he/she orders the defendant to honor and perform the terms of the contract. Orders of specific performance are rare in business law disputes because they often lead to further litigation, but judges may issue them if the contract was for the purchase of a rare or unique item or the defendant was hired to provide services that require specialized skills.

Resolving breach of contract disputes amicably

Many contracts contain clauses that require disputes to be resolved through arbitration or mediation. Even when they do not, judges may refuse to hear arguments in a breach of contract case until the parties have made a good faith effort to resolve the matter through mediation. Mediators are trained to help disputing parties find common ground, and they can sometimes produce a breakthrough even when a long and costly court battle seemed inevitable.

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