Roedel Parsons Koch Blache Balhoff & McCollister

What remedies are available after a breach of contract?

As we've discussed before, there are situations where an agreement you have entered into with a customer, vendor, supplier or other party is found to be unenforceable. Assuming you have a valid, enforceable contract, though, what can you expect when it comes time to enforce it?

When one or more parties fail to live up to their part of an agreement, it is called breach of contract. Depending on the situation and how you have chosen to resolve the breach, the non-breaching party can:

  • Seek money damages to make them whole
  • Ask a court to order the breaching party to perform their contract duties ("specific performance")
  • Attempt to have the contract canceled, in which case some parties may be due restitution

Note: The second remedy is only available from a court. Mediators and arbitrators are not authorized to order specific performance.

Suppose you are an art collector and enter into a deal to buy a particular painting by a certain date and you've made clear in the contract that time is of the essence because you have agreed to show the painting at a certain event. You remit payment but, a week before the event you still haven't received the painting. The art dealer explains that it will be unable to obtain the painting from the previous owner until after the date had passed.

In such a case, you might ask the court to order specific performance. It may be true that the dealer can't get the painting on time, but they might be able to do so under court order. If they fail to do so, they are not only in breach of contract but in violation of a court order.

Another option is to ask for the contract to be canceled, especially if the main value of the painting to you is reputational. If the contract were canceled, you would get your money back and the dealer would keep the painting.

Finally, you could seek damages. Most damages are meant to compensate the non-breaching party for the lost benefit of their bargain. However, especially in cases where the contract states that time is of the essence, additional damages may be available for specific breaches. A specific estimate of those damages may even be included in the contract. These are called "liquidated damages." And, if the breaching party has acted especially egregiously, you may be awarded punitive damages, which are meant to punish wrongdoers.

If you have suffered a breach of contract, you should work with your attorney to determine which remedies are available and which would be most beneficial in your situation.

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