Breach of Contract Remedies: What can you do?

It is not a perfect world. 

The advantages of having a contract are numerous.   The devil is truly in the details.   

By hashing out a written contact beforehand, you can unearth issues that no-one previously thought about.   A detailed contract can help the parties clear up any confusion before time or resources are spent.   

A well-thought-out contract can help avoid litigation.

In a perfect world, we won’t have to address breach of contract remedies at all.   

Unfortunately, we don't live in an ideal world, and people break the conditions of even carefully worded contracts every day.   What are the remedies for breach of contract? 

Five basic remedies for breach of contract

1. Show me the money

The first breach of contract remedy available to an injured party is a money damage award.  This is the most common breach of contract remedy used today.   

The court orders the person that broke the conditions of the contract to pay the other person.   The type of breach will dictate the monetary value.   

For example, say the plaintiff agreed to pay the defendant $50,000 to add to his house.   The defendant only completed 50% of the work. A court might award $50,000 in damages if it feels that it will cost the plaintiff twice as much to get someone else to complete the last 50%. 

If the work was fully completed, but defective, the court can order the cost of repair.   

As a rule of thumb, the amount payable is usually up to the value of the amount of what it will cost the person to get a replacement product or service.  The replacement, however, can be more expensive than the original quote, forcing a defendant to fork out more. 

2. Travel back in time 

The second remedy for breach of contract is restitution.   The idea is to get the injured person back to the position he/she was in before the contract was formed.   

It returns the plaintiff's money or property as if there was no contract in the first place.

Usually, plaintiffs want restitution when incompetence played a role in the contract.  If the plaintiff did not lose much, the court wants him/her in the same position as before the deal was formed.

For example, you pay someone $100 to come and remove a problem tree from your yard.   The person pitches, but soon you see he has never cut down a tree in his life. He does not even have the correct equipment.   The court will order the person to give back your $100.   

3. The disappearance of the contract 

‘Rescission’ is when the contractual duties of both parties are terminated, and the contract is redeemed void.   

This breach of contract remedy is used frequently where mistakes were made, where someone was unduly influenced or forced to sign something under duress.   

The parties split up as if there was never any contract.   

Rescission differs from restitution in the sense that no money exchanges hands.   Rescission is mostly used where one can delete a partly-completed contract.  

4. A mistake in the contract

'Reformation' allows the parties to a contract to think again.  A valid contract was breached, but in this breach of contract remedy, the parties to the agreement cancel the first contract to enter a better, second one.

Usually, a mutual mistake is valid grounds for reformation.  It will also be granted where a misrepresentation was made innocently.  Even if the lie was made intentionally, the contract could be reformed if both parties agree to it.    The entire agreement is often not rewritten.

5. There is nothing else like this.

The last of our breach of contract remedies discussed here is specific performance.   

In this remedy, the one party is forced by the court to perform his duties as set out in the contract.   Usually, a court uses this remedy when money damages are insufficient to compensate the plaintiff.    

Say the defendant damaged a family heirloom brooch during his jewelry repair service.   Money is irrelevant. The plaintiff wants the scratched ruby in the heirloom replaced.

Specific performance is a breach of contract remedy available to the parties of this contract.  The defendant must repair the heirloom to its original state by replacing the ruby.

You can read more about different types of breach of contract.

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