Common remedies for breaches of contract

On Behalf of | Dec 14, 2021 | Business Law

Every contract made between an employer and an employee in Texas is legally binding. The most common remedy for breaching a contract is financial compensation. There are other types of remedies available for breaches of contracts.

Compensatory damages

An individual who experiences a breached contract can sue for compensatory damages. This is the most common remedy that is awarded in court. The person who breaches the contract has to pay a specific amount of money to recover the monetary losses from the broken contract.

Specific performance

Specific performance is a remedy that involves exchanging the work that was promised in the contract. This option is chosen in unique situations when monetary damages cannot be easily compensated.

Injunction

An injunction is a form of specific non-performance in which the court orders inaction for the person who breached the contract. An injunction is often ordered while business litigation is pending to get the defendant to stop their actions immediately.

Rescission

Rescission is the cancellation of a contract after a breach. The non-breaching party can cancel the contract and refuse to complete their duties and refuse to allow the other party to complete their duties. Rescission is the easiest form of remedy in which the contract was never made in the first place.

Liquidated damages

Liquidated damages are monetary amounts that are often used in place of compensatory damages when workers cannot fulfill their portions of the contract. An example is a contractor who delays a construction project and has to pay damages for each day that it’s delayed.

Legal punishments for broken contracts

Every type of contract includes a specific remedy to fix it. Breach of contract is the most common reason for a civil lawsuit in U.S. courts. In these cases, non-breaching parties might be awarded some form of financial compensation.