A business contract is the glue that holds operations together not only within the business, but among other entities with which the business engages. Business owners in California and elsewhere know that contracts must not only be enforceable but also have the key elements necessary for the business to function, so that it will have protection in case there is a dispute.
Sometimes operations stall, causing delays, financing or performance issues, and when this happens disputes may result in the filing of a breach of contract lawsuit. Depending on the circumstances, the breach may be material or immaterial, and the legal approach for either will differ. If the amount is small enough, the dispute may go to small claims court. But once the two sides have attempted informal steps, if talks break down a lawsuit is the most likely next stage.
What are the different kinds of breach?
In a material or total breach of contract, the failure to perform under contract is so serious that it renders the contract null and void. In this circumstance, the injured party may request an end to the agreement and sure for damages. An immaterial or minor breach gives the injured party the option to sue but does not excuse future performance.
The guidelines for determining the gravity of the breach also provide a framework for awarding damages to the injured party, which may include an excuse from future performance under contract. Some considerations include:
- the extent of performance by the breaching party, as well as the benefit the injured party has already received from the contract
- if the breach was intentional or unintentional
- the expectation of future performance by the breaching party
- the extent of compensation available
- the burden on the breaching party if the court were to rule it a material breach
What are the remedies?
The remedies available to the plaintiff, depending on what type of breach it was, include:
- Damages, the most common remedy, that are compensatory, liquidated or punitive
- Specific performance, in which the breaching party performs the terms of the contract
- Cancellation and restitution of the contract
When involved in a business dispute, San Diego business owners should be aware of all their options for protecting their interests, especially if it means enforcing their legal rights in court.