Contracts exist to affirm the terms of business agreements and make them more readily enforceable. Business leaders execute contracts with investors and landlords. They sign agreements with vendors, service providers, and employees. Most contracts focus on what each party intends to do for the other. They may limit certain types of economic activity and establish penalties for specific types of misconduct.
Frequently, everyone who signs a contract does their best to uphold the agreement. However, contract breaches are a somewhat common occurrence. Sometimes, business leaders may determine that the breach and its consequences are not worth addressing. Other times, the violation of an agreement can have major implications for the company, its reputation, and its bottom line. In those scenarios, civil litigation can help remedy the situation.
What different solutions are available when pursuing a breach of contract lawsuit?
Contract rescission
In some cases, a breach of contract makes it clear that continuing to do business with the other party is not ideal. If a vendor or service provider cuts corners or fails to fulfill their contractual responsibilities, choosing to terminate the working relationship may be the best solution available. Contract rescission, or the judicial termination of a working arrangement between two parties, can sometimes be the most effective solution for a significant breach of contract that damages a working business relationship.
Contract enforcement
In some cases, companies want the other party to uphold the terms of the contract. They may expect a vendor to deliver materials or a service provider to redo work that did not meet contractual standards. Other times, they may want to enforce penalty clauses that create consequences for certain types of misconduct, delays in payment, or other issues. Asking the courts to enforce the contract with an injunction or order of specific performance can be a reasonable solution.
An award of damages
Contract breaches can disrupt company operations and cost the organization valuable projects. In scenarios where there is clear evidence that contract issues directly affected a company’s finances, it may be possible to seek compensation by requesting damages. The party that violated the contract may have to compensate the business for the economic impact of the breach.
Reviewing a contract itself and the impact that a breach has had on a business with a skilled legal team can help company leaders evaluate their options when considering civil litigation. A successful lawsuit can diminish the harm caused by a breach of contract and deter others from violating a similar agreement in the future.