Introduction
A contract is a common term in corporate as well as small businesses. In the process of conducting business, various contracts are signed as binding entities to fulfill agreements, failure to which there usually are consequences. In this regard, businesses cannot function without contracts; in fact, it is contracts that insure businesses, for instance, the ability of a manufacturer to deliver goods after receiving a down payment is quite difficult to determine without a contract. It, therefore, acts as a reference to agreement or commitment. Therefore every business transaction must be guarded by a contract, which binds every person that comes into agreement with the business, to fulfill his/her duties as is agreed on the contract. When two parties sign a contract, they are to fulfill their part of the bargain, if that is not possible, then we declare a breach of contract, in which case there are procedures to be followed to ensure that both parties are satisfied and adequately compensated for such events. This paper will explore the breach of contract along with its remedies.
Breach of contract
Contracts are binding and must always be fulfilled, however in the event of a failure, due to unavoidable circumstances; there is a procedure that must be followed to satisfy both parties. It is also imperative to note that some parties, especially in the business arena take advantage of such situations. Moreover, it is quite difficult to ascertain the intention of a party when such events occur. For this reason, any failures to fulfill a binding contract in businesses and other fields must have consequences. These are aimed at stemming such defaulters whose aims are usually to slow their partner’s progress. When such events occur, the affected party (non-breaching party) is allowed to seek remedy from the defaulter.
Breach of contract is very common in businesses and that has ensured strict guidelines and remedies that are put in place to handle such inconveniences. There are several forms of remedies for a breach of contract namely damages and reformation, among others. This paper will explore the most common types of remedies employed in business practices (Cross & Miller, 2008).
Common remedies for breach of contract
The most practiced remedies for a breach of contract are as given below.
Damages
Award of damages is the most common type of remedy offered to non-breaching parties in an event of a breach of contract. This is mainly done to compensate the loss of bargain to the party affected and in some cases for supplementary losses. This action tries to restore the affected party to its expected position in case the contract had gone through without breach. Four main categories of damages may be awarded to non-breaching parties. These include compensatory, consequential, punitive, and nominal damages (Cross & Miller, 2008).
Rescission and restitution
Rescission involves terminating or undoing the whole process; its aim is always to try and restore the affected party back to their initial state. This is usually followed in cases of fraud, mistake, or duress. Restitution, on the other hand, means rescinding the transaction. In this method, everything is taken from each party before the transaction is returned. It aims to restore both parties to their states before the transaction.
Reformation
This occurs whenever the parties involved have improperly articulated their concurrence in writing. It allows such contracts to be re-written so that the intentions of each party are reflected in the final contract. This occurs in situations where there is fraud or even mutual mistake by both parties. The aim is to put in place a fair contract for the two parties. In some instances this contracts can be disregarded and thrown out of courts, especially if there is unreasonable competition between the parties (Cross & Miller, 2008).
Recovery based on quasi contract
In cases where there appears to be no enforceable contract, this method can be applied to mitigate on unjust enrichment. Benefits can therefore be paid to the affected party. These incidences are common in courts as businesses tussle over deals and sometimes make unfair enrichment out of such contracts. This case applies when, for instance one party invests partially on the enforceable contract. In this case, refund can be claimed by the affected party.
Specific performance
This kind of remedy applies for unique goods or services in which the defaulter is usually obliged to fulfill their part of the deal. It happens mainly because items like land are usually unique and require that the very land be handed over. Otherwise, this method does not apply for goods available in other markets.
Conclusion
Many businesses find themselves tussling in court over breach of contract, with each of them trying to gain competitive edge over the other. Moreover, Breach of contract is rampant in businesses since some find it as a gain, when they take advantage of the others. However there are remedies to such occurrences, they include award of damages, rescission and restitution, among others. These remedies are essential in helping stem fraudulent parties (Cross & Miller, 2008).
Reference
Cross, F.B., & Miller, R.L. (2008). The legal environment of business: Text and cases – ethical, regulatory, global, and e-commerce issues (7th ed.). West: Cincinnati.