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How can the courts potentially settle breach of contract disputes?

On Behalf of | Mar 9, 2024 | Contract Disputes

Ideally, the parties signing a contract should do everything in their power to fulfill their written agreement. Unfortunately, sometimes contracts do not result in appropriate performance from all parties involved.

A business negatively impacted by a material breach of contract might decide to take legal action to resolve the issue. The civil courts theoretically have the authority to settle contract disputes in a variety of different ways. The following are some of the more common solutions that the courts offer for those embroiled in a breach of contract dispute.

Contract termination

Having an ongoing contractual arrangement with a party that has already breached the agreement may not be in the best interests of an organization. Sometimes, those affected by a breach of contract want to terminate the working relationship that they have with the other party. However, clauses within the contract might leave the overall arrangement in place and enforceable despite the breaches of one party. Going to court can lead to the termination or invalidation of a long-term contractual arrangement.

Compensation for damages

The failure of one party to uphold an agreement with another could cause numerous real-world economic losses. Provided that the plaintiff has evidence of the financial harm triggered by the breach of contract, the courts could award the plaintiff damages for the negative impacts the breach of contract has had. The courts can also uphold contractual clauses imposing penalties and fees for contract breaches such as late payments.

Orders of specific performance

A civil judge can enforce the terms of a contract by ordering one party to complete certain actions. An order of specific performance could provide relief for a company affected by the contractual non-performance of another party. A court order requiring that someone fulfill certain responsibilities or perform certain tasks could result in more consequences for the party in breach of the contract if they do not fulfill the terms set in the order of specific performance.

While the vast majority of contract issues settle, sometimes taking the issue to court is the best option. Understanding how the courts may resolve contract disputes may help business owners and executives plan the best response to a contract issue.