Contract Breaches and Remedies

When one party fails to fulfill his part of a contract and has no legal excuse, he has breached the contract. The parties can resolve the breach in several ways, known as remedies.

Breaches occur three different ways: failure to perform the contract, hindering the other party from performing, and repudiation, which is declaring your intent not to perform the contract.

Normally, failure to perform occurs when the breaching party does not perform an important part of the contract by a reasonable deadline. When one party hinders the performing party from fulfilling the contract, the breaching party may still be liable to pay for the work. Repudiation is a declaration prior to contract deadline by the breaching party that he cannot or will not perform part of the contract.

Remedies are solutions to breaches of contract. The offended party can simply persuade the breaching party to perform the contract. If that party is a merchant, the offended party may seek assistance from a local, state or federal consumer agency.

Other solutions include bringing the two parties to an agency to negotiate a resolution. The local chamber of commerce or the Better Business Bureau may be able to provide assistance. Finally, the other party may sue the breaching party for damages or for other remedies.

When a party sues for breach of contract, the court may do several different things. It may award damages, order the breaching party to perform the work, or cancel or rewrite the contract.

If a consumer has a contract with a company that goes out of business, several options are possible. If another business bought the company, the new business may honor the contract. When a company goes out of business because of financial reasons, having the contract performed or recovering any partial payment can be tricky. Suing the former company or filing a claim in bankruptcy court may be the only choices.

A contract can be a complex document whose goal is to give both sides a fair deal. Understanding what does and does not constitute a contract protects both parties from signing a contract that is void or unenforceable. Once a contract is signed, good faith between the parties should lead to the fulfillment of all obligations on both sides. When a breach of contract does occur, remedies are available to satisfy the dispute.