3 possible solutions for a breach of a business contract

On Behalf of | Apr 22, 2024 | Business |

Establishing a business contract helps to ensure that a company has supplies or services that are necessary for continued operations. Businesses sign contracts with their employees, with outside service providers, with landlords and with vendors. They rely on the other party to follow through on the terms of the contract. The failure to do so can disrupt operations and potentially cost a business money.

Sometimes, contract breaches are unintentional. Communication with the other party is all that is necessary to resolve the issue. Occasionally, the party in breach of a contract has no desire to resolve the issue. The owner or executive running the business may need to make the decision to take legal action. A breach of contract lawsuit can lead to several different solutions for contract disputes. The following are three most common remedies requested in contract litigation scenarios.

Contract termination

Many contracts include terms that make them enforceable even if either party violates the agreement. Therefore, one party may still need to do work for the other or issue payment despite the poor performance or non-performance of the other party. Sometimes, the best outcome for a breach of contract lawsuit is to have a judge invalidate or terminate the contract. For example, a commercial tenant dealing with the landlord who doesn’t properly maintain the facilities could ask to terminate the lease so that they can begin renting elsewhere without overextending the company.

Compensation for damages

Many contract breaches affect how a company operates and might even prevent the organization from fulfilling other contractual obligations. The courts can compensate a company for the financial impact of a breach. When a plaintiff in a breach of contract lawsuit can show obvious financial losses directly related to the contractual non-compliance of the other party, a judge might agree to award financial damages. Damages can also include penalties and fees assessed in accordance with the contract terms.

An order of specific performance

The failure to perform in accordance with the terms of a contractor to deliver materials to a company can cause numerous challenges, not the least of which is the need to find another supplier or service provider. Judges can sometimes enforce or uphold the terms of a contract by issuing an order of specific performance. If they do, then the party subject to that order must deliver goods or perform work in accordance with the court order. The failure to do so could lead to additional penalties, including allegations of being in contempt of court.

A pending contract lawsuit might be enough to prompt someone in breach of a contract to fulfill their obligations or agree to attempt alternative dispute resolution. Knowing when to take action can help those who operate businesses enforce their contracts and seek other remedies for contract violations, whether their pursuit of justice reaches a courtroom or not.