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How can my business be remedied after a breach of contract?

Back in February, we discussed a business' next steps after a party it has contracted with breaches that contract. One of the things we mentioned was that there are several possible remedies an allegedly wronged business can seek, specifically referring to damages.

Damages are indeed a common goal in breach of contract lawsuits. The nonbreaching business likely has suffered a financial loss because of the breach, and wants the defendant to make it whole again with cash. But it is not the only possible outcome to a successful breach of contract suit.

First of all, let us define damages. There are actually several forms of damages that plaintiffs can receive in a court verdict. Compensatory damages, as the name implies, are meant to put the plaintiff in the position they would have been in had the breach not occurred. Punitive damages go beyond compensating the plaintiff. They are meant to financially punish the breaching party for particularly egregious conduct. Given the context of business transactions, punitive damages are rare.

Sometimes, the court will find that a breach occurred, but that the plaintiff suffered no actual losses. When that happens, the court will award nominal damages, a small, ceremonial amount that acknowledges the breach but does not enrich the plaintiff.

In some cases, the plaintiff will ask the court for specific performance instead of damages. Under specific performance, the breaching party will be ordered by the court to perform its duty under the contract. Specific performance is usually most appropriate when the contract is unusual or unique in some way, and damages would not be sufficient.

Finally, restitution sounds similar to damages, but is subtly different. A non-breaching party may be able to cancel the contract and sue for restitution, which is meant to have the breaching party give back a benefit conferred by the non-breaching party, in order to place the non-breaching party in the position it was in prior to the contract.

Determining the remedies your business should seek will help you and your attorney move forward with your claim.

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