Basics of Contract Law (Part Two)

This past Tuesday, we began post one (i.e., how contracts are formed and interpreted) of a three-part series of in depth discussions about the basics of contract law. For part two, today we are discussing some common remedies for breach of contract.

Common Remedies for Breach of Contract

To begin, various remedies are available for a breach of contract, and the appropriate remedy will depend on the facts and circumstances. Common remedies include: monetary damages; specific performance; and contract rescission.

Monetary Damages

Monetary damages are sought by the non-breaching party to recover the losses caused by the breach. These include general damages and consequential damages. specifically, general damages are the losses that are directly caused by the breach, and consequential damages are losses that are indirectly caused by the breach. For example, general damages could include receiving a refund from a company that failed to provide you with a product or service you purchased from them for use in your business, and consequential damages could include a payment from the company for any loss of business you faced as a result of not receiving the product or service.

Specific Performance

When monetary damages will not adequately compensate a non-breaching party, the non-breaching party may seek specific performance. For example, if a seller agrees to sell her home to a buyer and later backs out, the buyer could seek specific performance of the real estate purchase contract because real property is considered unique.

Contract Rescission

A non-breaching party could seek to rescind the contract or, in other words, to be released from his obligations under the agreement because of the breaching party's failure to perform his obligations under the contract.

These are a few common remedies. Because not all contracts are created equal and may have certain provisions limiting the availability of remedies a party may seek in the event of a breach of contract, it is best to consult a licensed attorney in your jurisdiction if you have any questions about seeking an appropriate contract remedy or about contract law.

For future discussions about other contract law basics, please check back this Friday, where we will discuss part three of the basics of contract law series.

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