A contract is an agreement that is signed by two or more parties. It can include individuals, companies, government bodies or civil groups. The agreement is the bond whereby parties certify and guarantee under oath to perform or cease from doing any specific action for a certain price, or under penalty or forfeit.
For example, non-payment of rentals may lead to the forfeiture of a commercial lease. Often, these contracts are executed in the form of writing, whether informal or formal. But in some rare cases, it can also be performed verbally.
The terms of the contract often contain important terms as who, what, where and how. These stipulations are specifically laid down and agreed by both parties in a way and manner that the agreement should be done.
What Is a Breach of Contract?
A breach of contract occurs when one of the parties fails to meet their part of the agreement. There are several reasons for a breach of contract in a company or by an individual. A breach occurs under the following conditions:
- One of the party has refused entirely to perform his obligations as stipulated in the contract.
- One of the parties involved in the agreement has performed some dealings that ran counter to the objective or stipulations of the contract.
- One of the parties has made it difficult to perform the other party’s part of the contract for reasons unknown to the involved.
What Are the Remedies?
There are several possible ways to remedy a breach of contract. In case of infringement of contracts, here are some of the best steps to take.
- Require Specific Performance – A court with jurisdiction can carry out an order directing the performance of the obligations as stated in the contract.
- Rescission – The contract may be rescinded by agreement of both parties. This happens when both parties are no longer interested in performing whatever it is that has been agreed upon. Any monetary consideration extended will be paid by the parties with damages or interests as the case may be.
- Reformation of the Contract – The terms may be re-adjusted, reformed to afford the erring party a chance to perform his obligation to the agreement.
- Damages – Compensatory damages may be demanded to cover for all the losses suffered by the suffering party.
- Incidental, Consequential and Other Damages – Damages will be paid for to cover for all the losses and damages brought about by the breach, which are known to both parties.
- Liquidated Damages – This form of damages may be demanded in case a fraudulent act has been done and proven.
- Legal Fees – These may only be reimbursed and paid for by the party who resulted the breach if it has been expressly stated in the contract.
Filing of Charges
Existing laws, especially those that deal directly with breaches of contract provisions enables contracting parties protection against fraud and unlawful refusal to perform a part of what has been agreed upon. The law can compel both parties to the contract to ensure the fulfilment of what has been stipulated in the contract.
Where direct negotiation is not possible for both parties to settle things outside the court, they must consult with an expert business attorney who can handle the case from beginning to end.