Breach of Contract: Remedies

Contract lawThere are five main remedies to breach of contract. They are money damages, restitution, rescission, reformation, and specific performance. Each of these remedies will have different uses, outcomes, and benefits in a breach of contract case. Some will benefit certain cases more than others and cannot always be deployed equally. The remedy that is being sought must be demanded in the complaint.

Money damages means you are awarded some amount of money as compensation for losses due to the breach of contract. This means that if you paid someone to paint your fence and they stopped, you would be awarded damages on the lost fence payment due to the contract breach. You may be able to seek more money damages if you did things like advertise for more needed services to hire another painter or other replacement employee or service. There can also be an award of damages for a lost opportunity to enter another contract because of taking the current contract. Those damages are rarely obtained, but should always be pursued.

Restitution exists to place the plaintiff in the position of being as if they had never entered the contract. If someone had painted your fence poorly and you needed it repainted you could be entitled to restitution.

Rescission means a contract will either be terminated when someone is terminated or the contract is unmade between parties. The contract will be undone as far back as possible to bring the party into a state of being when they were not in the contract at all. Rescission can also be employed when contracts are fraudulently misrepresented or while under duress. If you entered into a contract for fence painting, only to find out the painter lied about the painter’s experience, you may be able to seek restitution. This makes both parties the closest they’ll be to the state they were before the contract, or status quo ante.

Reformation is a type of equitable remedy where the contract is rewritten or “reformed” so that the contract now better expresses the intentions of the parties. The reformation exists to remedy the breach and allow the parties to continue working together in the future under better conditions for all parties involved. This situation would be if you hired someone to paint your fence, but didn’t specify how long they should work per day or how many days a week they should work. You can seek to reform the contract to say, for example, that you need seven hours a day with at least 4 days a week. All parties involved can now move forward with a more clear understanding of the needs and demands of the contract and those involved.

Specific performance means that someone is ordered by the court to finish their service as promised. An example of specific performance would be if someone was hired to paint a fence and then stopped, they’d be court ordered to finish the fence. Other than in certain types of transactions (particularly real estate), specific performance is a more difficult remedy.

Breaches of contract can result in more than just monetary damages. The type of breach of contract remedy depends on the contract and the client objective, but the varying remedies provide an opportunity for creative lawyering to tailor the remedy to the situation.

Thanks to our friends and contributors from Patterson Law Firm for their insight into contract breaches.