A breach of contract can have serious consequences for a business. It can cause the business to lose money and can also cost them money. For that reason, business owners should be familiar with the different types of damages available for a breach of contract.
A breach of contract occurs when one party fails to perform their obligations under the contract. In contract dispute situations, different types of damages may be available to the non-breaching party including:
Monetary damages
Monetary damages may be available to compensate the non-breaching party for the damages suffered as a result of the breach of contract. Compensatory damages are a type of damages that are designed to compensate the non-breaching party for the breach and put them in the same position they would have been had the breach not occurred.
Other types of damages that may be available include nominal damages when a contract breach has occurred but no monetary harm was suffered or liquidated damages which is a specific damages provision included in the contract naming a reasonable amount of damages if the contract is breached.
Specific performance
Specific performance is another remedy for a breach of contract. Specific performance is court-ordered performance of the contract by the breaching party.
Cancellation and restitution
A final remedy is that the contract may be voided and rescinded. In that circumstance, the breaching party may be required to pay restitution to put the non-breaching party in the same position they were in prior to the breach.
Legal protections in situations of contract disputes are important. They can potentially help businesses mitigate the damages of a contract breach which can take a toll on a business.