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Breach of Contract Explained

Please ensure you read and understand the disclaimer before reading this article. Always consult a qualified lawyer for your legal advice.

In business, contracts are used to state the legal and binding agreement between two parties. However, from time to time situations and actions occur which breach these contracts and in the event that you are in a contract with someone who breaches their agreement, you may be entitled to compensation of some type. Exactly what and how much can vary according to the situation and how you were wronged by the breach.

According to a legal and binding contract, both parties must adhere to the terms of the contract until and unless both parties agree to a change in the contract at which point, a new contract would need to be written. In the event that one party breaks the contract or acts in such a way that it causes the other party to break the contract terms, this will be considered a breach of contract. When this happens, the injured party may be subject to compensation of some type.

What can you do if your contract is breached?

• Contact an experienced attorney right away.
• Be sure you have a copy of your original contract.
• See if your contract included what would happen if there was a breach of either party.
• Know your rights and how you can be compensated for this breach in your contract.

Make sure that when you are faced with a breached contract that you do not try to handle it on your own. The easiest and best way to resolve this issue is by enlisting the help of an experienced attorney that you know you can depend on. They can give you the legal advice needed to handle the situation.

When to Seek Legal Aid

If you feel that you have a breach of contract, when should you seek legal aid with your case?

Some times when you should seek legal aid are:

• If you feel you are the victim of fraud
• If there is disagreement over the validity of the contract

The following should provide helpful tips and hints for common breach of contract complications that occur. This advice can never replace the legal council of a qualified attorney but it can help you decide when to seek help.

When two people sign a contract and one of these parties fail to meet their obligations or fulfill their end of the agreement, then it can be considered a breach of contract.

Some examples of a breached contract are as follows:

• One of the parties simply refuses to meet the agreement of the contract.
• One of the parties intentionally does not perform up to the standard agreed on by the contract.
• When one of the parties does something that makes it impossible for the other party to meet the obligations of the contract.

When you are dealing with a contract that has been breached there are several ways to remedy the situation.

Breach of Contract Remedies

There are several options available to you when you are the victim of a breached contract. Of course, the end result will depend on the amount of damage you suffer due to the breach of contract.

Below are a few of the main remedies you can seek when you find yourself in this situation:

• Nominal Damages – This provides the minimal amount of compensation when the financial loss was at a minimum.
• Liquidated Damages –In the contract there will be a stipulation that states if the contact is breached, the party at fault will pay a specific amount of money referred to as liquidated damages. This amount is agreed on by both parties before the contract was signed.
• Consequential Damages – If you are awarded consequential damages the party that breached the contract will be required to pay the other party an amount of money that will put them back into the same position they would have been in if the contract had not been breached.
• Punitive Damages – With this type of compensation the one who breached the contract will have to pay the other party a certain amount of money for breaking the contract.
• Specific Performance – In this case the party that breached the contract will be forced by the court to carry out the obligations set forth in the contract.

Of course, compensation is only awarded when the non-breaching party is the one to win the case.  

If you find yourself dealing with a contract that has been breached don’t wait too long to try and handle the situation. There is a statue of limitations on filing a lawsuit for a breach of contract and it is different in each state.

Normally, both parties that enter into a contract will do so with the very best of intentions. However, sometimes things just do not work out the way you plan and the result may be a breach of contract.