What happens after a party breaches a contract?

If you own a business in Los Angeles, you know that maintaining successful relationships with customers, contractors, vendors and other partners is crucial. You should also know that oftentimes, these relationships and the deals that come with them are defined in writing with a contract.

In the event that a party breaches - or breaks - the terms of a contract, there are a few legal options available to provide relief to the non-breaching party.

Performance of duty
This means the breaching party will complete performance of the duties specified in a contract. For example, if the breaching party was supposed to sell a property, the courts can order it to sell the property.

This is often the result of a contract breach when money is not an adequate remedy and when the work or duty in question is unique.

Payment of damages
Many cases involving a breach of contract will result in payment of damages. There are different types of damages that courts may award in cases of contract breach, including:

  • Compensatory (money to cover the loss incurred by the non-breaching party)
  • Punitive (money intended to punish a breaching party)
  • Liquidated (damages established in a contractual clause in the event of a breach)

There could also be restitution ordered, which is essentially paying back the non-breaching party.

Cancellation of the contract
Cancelling a contract can seem like the most desirable option in the event of a breach, but you must be careful about pursuing this option. In some cases, you may not have the option of canceling the contract and in other cases, canceling the contract can have consequences you may not expect.

Seeking the appropriate remedy
Before you sign any contract, it is wise to consult an attorney so you can be confident that you understand the terms and expectations in order to avoid a breach.

If you are already involved in a contract dispute stemming from a breach, you can discuss the various remedies and methods of resolving the dispute with your attorney. Having legal guidance and support in either scenario can help you avoid costly mistakes that jeopardize your company, your relationships, and your legal options. 

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