Most business transactions rely on the finer details in a contract. A contract should outline several details of an exchange between multiple parties, such as the intent of the contract, what each party is expected to give and gain and how long the business relationship lasts.
Even a well-defined business contract can be breached. There are several kinds of contract breaches, including:
- Material breach
- Minor breach
- Anticipatory breach
- Actual breach
Parties can seek legal recourse to resolve a contract dispute. Some of these dispute resolution methods depend on the kind of breach that was done. These resolutions include:
1. Compensatory damages
Compensatory damages are a common contract breach remedy that, essentially, rewards the non-breaching party with money. The breaching party is responsible for paying damages equal to what the contract promised.
2. Punitive damages
If a breaching party takes advantage of another party, the non-breaching party may seek punitive damages. Punitive damages mean the breaching party may have to pay the other party much more as a form of punishment for their actions and to deter them from making the same mistake in the future.
3. Nominal damages
In a case where a contract has been breached but it is not clear how a party may have suffered from the breach, the non-breaching party may be given nominal damages. Nominal damages are often a small sum of money.
4. Remedies in equity
Resolving a contract dispute may not just be done with money. A court may decide on a remedy in equity, which can mean that a contract is canceled or a specific action is done to resolve the breach.
Can a contract dispute be avoided?
To avoid contract breaches, it is important to have a strongly written contract. Contracts can include clauses that specify what happens if a party breaches the terms. If a breach happens, it can help to seek legal guidance.