19
Mar2015
breach of contract remedies

What Can I Get After a Breach of a Contract?

After a breach of contract, there are several remedies available to you. A breach of contract is when one party fails to live up to their contractual duties or promises. Depending on the nature of the breach, the other party may suffer anything from a minor inconvenience to a substantial financial loss. For this reason, the aggrieved party is usually entitled to seek one of several forms of damages or compensation.

Compensatory Damages: The Benefit of the Bargain

Where one party breaches a contract, the other party can ask the court for compensatory damages. This type of damage is called “compensatory”. It is designed to compensate the non-breaching party for their losses. In other words, this type of damage gives the aggrieved party the “benefit of the bargain”. For example, suppose that Jim paints Alex’s garage for $1,000. Then once Jim paints the garage, Alex refuses to pay. Jim would collect $1,000 and get the “benefit of the bargain”. Jim operates on a 50% profit margin. His cost breakdown is $100 for paint, $400 for labor, and $1,000 for the garage job. If Alex breaches the contract before Jim begins preparation or work for it, Jim could sue for $500, i.e. This is the net profit he could have earned if Alex did not breach the contract. If Alex breaches the contract half-way through the job, Alex would have to pay $500. This is the cost for half of the job that was completed and $250 net profit on the uncompleted half. Additionally, he would have to pay incidental expenses (paint bought that’s no longer usable).

Restorative Damages: Pressing the ‘Reset’ Button

In contrast to compensatory damages, restorative damages are like pressing the ‘reset’ button. Restorative damages “restore” both of the parties to the situation they were in before the contract. In the example above, if Alex breached the contract after Jim bought the paint, he may have to restore Jim. He would award him the money he spent getting ready to perform the job.

Other Types of Damages: When Money is Not Enough

Depending on the specific facts of a case, other types of damages may be available. Where the contract concerns something rare or unique like a rare painting or priceless artifact, money may not be enough to give the party who was wronged the benefit of the contract. Specific performance – a court order directed to the party who breached – may be available. This would require the party who breached to follow through with their contractual obligations. For instance, Jim owns a priceless watch that a U.S president previously owned. He previously agreed to sell Alex the watch. However, he sells it to someone else. Alex may be able to pursue a specific performance as a remedy since Jim breached the contract.

Choices, choices, choices…

Although the wronged party gets to choose what type of damages to pursue in court, they may often only choose one type. But sometimes, certain types of damages can be added together. If someone had a job on a one-year contract that paid $100 a month and got fired after seven months, they could be awarded the five months of lost pay plus the cost of looking for a new job.

Deciding what type of damages to pursue takes careful consideration of the type of contract that was broken, as well as what damages will put you in the most advantageous and favorable position. At the Patterson Law Firm, we can help you understand your options after there has been a breach of contract. We will advise you on what damages are available to you and help you make an informed choice. Contact us today at (312) 223-1699.

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