What Is a Breach Of Contract And Why Do We Need a Contract?

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The world that we live in is not ideal and hence, uncertainties are bound to exist. In a world that is governed by Murphy’s Law, whether deliberately or errantly, these uncertainties can create a reason to break one’s contractual obligations. There can be many reasons why a breach of contract may happen namely, economic uncertainty; loss due to higher costs or a technical reason. A comprehensive agreement made beforehand from an experienced Rockland County contract litigation attorney can prevent many issues before they occur


What does a breach of contract mean? 

A contract in simple terms are a set of obligations that a party agrees to abide by. If either parties fail his obligation, the contract is said to have been “breached”. A breach is further classified into material and immaterial. A material breach is a situation in which the party affected by the breach, suffered a damage that was material in nature, while an immaterial breach is the one in which the party’s loss is not economic. 

What can happen if there’s a breach of contract? 

If a breach of contract occurs, the non-breaching party will want to seek enforcement or monetary compensation for any losses resulting from the breach. The first step is attempting to negotiate a resolution that both sides can live with.

Common Breach of contract remedies 

If the dispute is still not resolved, a formal court litigation action can be filed and the proceeding is carried out as per the law. Here are three possibilities that can happen to the losing party:

1.Damages: A damage that is incurred by the party whose trust is breached is decided by a panel. There are three basic types of contract damages: 

  • Compensatory Damage: Its aim is to put the winning party in the position where the party would have been if the other party would have kept his promise.
  • Liquidated Damage: If the amount of the damage is already discussed and mentioned in the contract, and not subject to accurate measurement, this damage becomes the basis of amount payable by the forfeiting party.
  • Nominal Damage: It is a damage where no loss of money could be proved by the breach of the forfeiting party.

2.Specific Performance: Sometimes, if the non-breaching party has incurred a loss that could not be paid by breaching party in monetary terms, it could be made to perform its duty under the contract. This is called specific performance. 

3.Cancellation and Restitution: If the non-breaching party finds that the contract does not suffice for the damage or the obligation of the forfeiting party is poorly scripted, the party can file for cancellation of the contract. This will relieve both parties from any obligation that might benefit the breaching party. 

It is very important to have a contract, especially where construction work is involved since we can never be sure of a delay in work. Remember time is money and delay is a loss!

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