Breach of Contract

A breach of contract is a failure by a party to a contract to render performance when performance is due under the contract. A contract can be breached in many different ways. To determine whether there is a breach, the first place to look is the contract terms. If the contract does not address the issue, then the courts will look to statutory law as well as the caselaw or precedent, meaning what courts have done in similar circumstances.

Some breaches are obvious, such as a failure of a contractor to build a structure that complies with the building code or the failure of a tenant to pay rent on a timely basis. Other breaches are more subtle. For example, the insistence by one party on a term that is not part of the contract, has been held to be a breach of the contract.

Damages for Breach of Contract

The typical damages for breach of contract are:

  1. Compensatory
  2. Rescission
  3. Specific performance

Compensatory damages are commonly referred to as benefit of the bargain damages. The goal of compensatory damages is to put the parties in the position they would have been in, had the contract not been breached. Damages include things such as expenses and lost profits.
Rescission does the opposite. Rescission seeks to put the parties in the position they would have been in had the parties never entered into a contract. Under this remedy, the non-breaching party would be entitled to be reimbursed for all expenses incurred in furtherance of the contract.

Specific performance is usually a remedy sought in real estate transactions. Due to the unique nature of real property, the court will order a seller who agrees to sell a piece of land to complete the transaction, rather than award money damages because money will not compensate for the unique nature of real property. This remedy can apply to other contracts, but only if money damages would not fully compensate the non-breaching party.

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