Contracts form the backbone of most business relationships. Before a Dallas business agrees to work with another party, they will likely sign a contract to specify the terms of their relationship and expectations that each has for the performance of their contractual duties. In addition to performance terms, contracts also generally include provisions on the damages the parties can seek if the others breach their agreements.
This post will introduce some of the types of damages that contracts may include for the protection of the parties. This post does not constitute legal advice. All questions about business litigation and breaches of contracts should be directed to Texas-based business law attorneys.
Monetary damages from breached contracts
Most business owners want their money back when the contracts their businesses enter are breached. Monetary damages compensate businesses for the losses they sustain when other fail to execute their contractual duties. These damages can include:
- Compensatory damages: Money damages that allow the injured party to acquire what they needed from the breached contract from another source.
- Punitive damages: Money damages that are intended to punish the party that breached the agreement.
- Restitution: Money damages that return an injured party to their original state before the contract was created.
Not all breach of contract remedies involve money. Others include actions that help the injured party move beyond their losses from the breach.
Equitable damages from breached contracts
Equitable remedies generally involve compelling the breaching party to act or do something in support of the injured party’s needs. For example, an order for specific performance would require a breaching party to follow through on their commitment to the contract and fulfill their contractual duties. Another option, cancellation, would allow the parties to walk away from the contract without further involvement.
Different contracts will have different damages’ terms in their provisions. It is important that business owners understand that their contracts may not include any or all of the examples provided herein. Legal counsel from trusted attorneys can help individuals get to the bottom of their breach of contract questions.