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When Contracts Go South

Many types of remedies are available in a typical breach-of-contract case. Consider the simple example of a seller agreeing to sell 200 widgets of a certain type, color and quality to a buyer for a set price. If the seller fails to deliver on the contract, either by not delivering the widgets or by delivering fewer, lower-quality, or different color widgets than agreed, a breach of contract has occurred. The law is designed to make the non-breaching party whole. Thus, depending on the type of breach and the damage suffered by the buyer, the following remedies might be available:

Expectancy Damages: Expectancy damages seek to place the non-breaching party in the same position she would have been if the contract had been fully performed. So, if the seller in the example above only delivers 100 widgets, thereby forcing the buyer to purchase the remaining 100 widgets from an alternate source at a higher price, the seller should compensate the buyer for the difference between the higher price and the contract price.

Rescission: If the breaching party commits a significant material breach, the non-breaching party could be entitled to rescind the contract. For example, if the seller delivers 200 poor-quality widgets, the buyer may be able to cancel (i.e., rescind) the contract and find a different seller.

Specific Performance: Although rare, the remedy of specific performance compels a breaching party to perform the contract. Using our hypothetical example, if the seller is able to fulfill the widget contract but simply refuses to do so, a court might compel him anyway.

Other Remedies: Depending on the facts and circumstances of the case, other contract remedies could include consequential damages, punitive damages, liquidated damages, constructive trusts, equitable liens, injunctions, or reformation of contract, to name just a few.

So the next time somebody breaches their promises to you, be sure to consult a competent attorney who can advise you what remedies you’re entitled to.

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