Contract breaches can cause operational disruptions, brand damage and financial setbacks for otherwise successful organizations. Businesses that have previously negotiated contract terms with service providers, vendors or employees generally expect those parties to uphold their end of the agreement.
Unfortunately, contract breaches are somewhat common. An employee might violate a non-disclosure agreement by sharing private company information on social media. A construction firm may fail to complete a renovation project. A vendor might stop making deliveries on schedule or may attempt to overcharge for what they provide.
Breach of contract lawsuits are often the most expedient solution to operational headaches generated by contract violations. Seeking the right remedies in a breach of contract lawsuit is of the utmost importance.
What remedies are typically available?
The type of contract and the nature of the breach influence the solutions that the courts could theoretically offer. That being said, there are certain options that are available in most scenarios. Plaintiffs can seek rescission or the invalidation of the contract. They can request specific performance, which involves the courts compelling the other party to follow through on contractual obligations, such as the completion of a construction project or the delivery of goods.
Judges can also issue injunctions in cases where one party may have violated restrictive covenants by sharing information or engaging in unfair competition against the other party. The courts can potentially uphold penalty clauses integrated into the initial contract. Penalty clauses often impose a specific financial consequence for a clear violation of the agreement.
The courts also have the authority to award plaintiffs damages when the contractual violations of the defendant have a clear economic impact on the plaintiff. Decreased revenue and lost productivity due to operational interruptions are among the complications that could result in the courts awarding the plaintiff damages.
Plaintiffs do not necessarily need to choose only one form of relief. A plaintiff frustrated by the non-performance of another party could request both contract rescission and an award of damages. Those seeking specific performance could ask a judge to uphold the terms of the initial contract, including any penalty clauses. The best solutions differ depending on the nature of the contract, the type of breach that occurred and the continued relationship between the two parties.
Businesses seeking to hold another party accountable for the failure to fulfill contractual obligations may need help evaluating different remedies and developing the case before going to civil court. Reviewing the different remedies available through litigation with a skilled legal team can help business owners and executives determine the most effective course of action.