Contracts are integral to business. They set out the role of employees, the parameters of a purchase order and the agreement made with clients. A failure to abide by the terms of the contract can have serious consequences for all involved. When one party fails to uphold their end of the agreement, they may be in breach of that contract.
There are generally three legal remedies available for a breach of contract:
- Cancellation. This would result in cancelling the contract and then suing the breaching party for restitution, or repayment of any benefit the breaching party received from the non-breaching party.
- Specific performance. For this remedy, the court would require the breaching party fulfil their end of the bargain.
- Damages. This refers to a monetary award. For this remedy the court would order the party that breaches the contract to pay a certain amount to the other party. These payments may essentially refund the non-breaching party. The court could also order additional damage payments to serve as a punishment for the breaching party.
It is important to note that there are instances when a court may excuse a breaching party’s failure to uphold their end of the bargain. This was apparent during the COVID-19 pandemic. As we continue to navigate through this pandemic, we see that courts are much more willing to accept defenses or excuses to fulfilling contract obligations. The force majeure clause has gotten a lot of publicity during the pandemic as a defense to breach of contract allegations. As a result, it is important for those who are navigating contract issues to be aware of these and other defenses to help better ensure they build a case that will protect their business’ interests.