Whether one is buying real estate, entering into a business deal, or hiring an employee, a relationship exists. Contracts are an integral part of just about every major transaction. Generally speaking, a contract is an agreement to enter into a bartered exchange. Therefore, an offer must be made by one party, and that party must accept the offer in exchange for something else. Many individuals and businesses come to rely on the promises made in these situations, so anytime a party doesn’t adhere to their end of the bargain, significant damages can be suffered. This failure to uphold an agreement is a breach.
When a breach of contract occurs, a party can seek one of four types of damages. First, one can seek compensatory damages. This compensation aims to put the victim in the same position he or she was in prior to the breach. The second type of damages are punitive damages. Those who successfully obtain these damages will receive compensation not for their losses, but as a way to punish the party who breached the contract. Punitive damages are usually only awarded when the breaching party engaged in some type of serious wrongful act. For this reason, punitive damages are rarely awarded.
There are other recoverable damages. Nominal damages, for example, are paid when there has been no financial loss but a breach has occurred. Next, a contract may spell out a particular amount of money that is supposed to be paid in the event of breach. This is known as liquidated damages.
Another remedy for breach of contract is specific performance. Here, a victim of a breached contract can seek to have the breaching party to conform to the terms of the contract. Typically, though, specific performance will only be ordered by a court if the subject of the contract was unique in some way, and the payment of damages would not be a suitable remedy.
Unfortunately, contracts are breached more than we would like. However, not everyone who is a party to a contract breach handles the matter appropriately. This can lead to lost money and even damage to one’s reputation. For this reason, regardless of which side of a contract dispute one finds him or herself on, it may be best to discuss the matter with a skilled business law attorney.