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Contract Remedies Available to NY and NJ Businesses
Author: Scarinci Hollenbeck, LLC
Date: March 22, 2013
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Contract breaches are the most common type of business litigation.
Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. To give businesses an idea of what to expect from a breach of contract lawsuit, this post offers a short summary of the most common contract remedies.
Monetary Damages
An award of damages is the most common breach of contract remedy. It generally involves payment of some form, made by the breaching party to the non-breaching party. There are many kinds of damages, and a few common types are described below.
- Compensatory damages aim to put the non-breaching party in the position that they had been if the breach had not occurred.
- Punitive damages are payments that the breaching party must make, above and beyond the point that would fully compensate the non-breaching party. Punitive damages are designed to punish a wrongful party for their actions, and are rarely awarded in the business contracts setting.
- Nominal damages are token damages awarded when a breach occurred, but no actual money loss to the non-breaching party was proven.
- Liquidated damages are specific damages as predetermined by the parties in the contract itself should a breach occur. Liquidated damages should be a reasonable estimate of actual damages that might result from a breach and the contract must clearly state this. Failure to properly word the clause will allow the sum certain to be characterized as a penalty and you may not be able to collect as penalties are generally not enforceable.
Equitable Remedies
In cases where monetary damages cannot adequately address the wrong, the plaintiff may ask the court to order equitable relief. The primary equitable remedies are detailed below.
- Specific Performance: Specific performance is best described as the breaching party’s court-ordered performance of duty under the contract. Specific performance may be used as a remedy for breach of contract if the subject matter of the agreement is rare or unique, and damages would not be sufficient to place the non-breaching party in as good a position as they would have been had the breach not occurred.
- Rescission: As the term implies, “rescission” of the contract voids the contract and relieves all parties of any obligation under the agreement. This may be appropriate when the non-breaching party has not suffered significant monetary damages and simply wishes to walk away from the agreement. The parties may also seek to enter into a new contract.
- Restitution: A non-breaching party may also cancel the contract and sue for restitution if the non-breaching party has given a benefit to the breaching party. The goal is to return the non-breaching party to the position it was in prior to the breach.
- Contract Reformation: The aggrieved party may also ask the court to rewrite the contract to more accurately reflect the intent of the parties. This remedy may be appropriate in cases of misrepresentation or mistake regarding a specific term of the agreement.
While this post offers a broad overview, contract remedies are specific to the specific agreement and circumstances of the parties. Therefore, it is imperative to consult an experienced business attorney who can evaluate all of your options.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
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Contract Remedies Available to NY and NJ Businesses
Author: Scarinci Hollenbeck, LLC
Contract breaches are the most common type of business litigation.
Therefore, nearly all New York and New Jersey businesses will likely have to deal with a contract dispute at least once. To give businesses an idea of what to expect from a breach of contract lawsuit, this post offers a short summary of the most common contract remedies.
Monetary Damages
An award of damages is the most common breach of contract remedy. It generally involves payment of some form, made by the breaching party to the non-breaching party. There are many kinds of damages, and a few common types are described below.
- Compensatory damages aim to put the non-breaching party in the position that they had been if the breach had not occurred.
- Punitive damages are payments that the breaching party must make, above and beyond the point that would fully compensate the non-breaching party. Punitive damages are designed to punish a wrongful party for their actions, and are rarely awarded in the business contracts setting.
- Nominal damages are token damages awarded when a breach occurred, but no actual money loss to the non-breaching party was proven.
- Liquidated damages are specific damages as predetermined by the parties in the contract itself should a breach occur. Liquidated damages should be a reasonable estimate of actual damages that might result from a breach and the contract must clearly state this. Failure to properly word the clause will allow the sum certain to be characterized as a penalty and you may not be able to collect as penalties are generally not enforceable.
Equitable Remedies
In cases where monetary damages cannot adequately address the wrong, the plaintiff may ask the court to order equitable relief. The primary equitable remedies are detailed below.
- Specific Performance: Specific performance is best described as the breaching party’s court-ordered performance of duty under the contract. Specific performance may be used as a remedy for breach of contract if the subject matter of the agreement is rare or unique, and damages would not be sufficient to place the non-breaching party in as good a position as they would have been had the breach not occurred.
- Rescission: As the term implies, “rescission” of the contract voids the contract and relieves all parties of any obligation under the agreement. This may be appropriate when the non-breaching party has not suffered significant monetary damages and simply wishes to walk away from the agreement. The parties may also seek to enter into a new contract.
- Restitution: A non-breaching party may also cancel the contract and sue for restitution if the non-breaching party has given a benefit to the breaching party. The goal is to return the non-breaching party to the position it was in prior to the breach.
- Contract Reformation: The aggrieved party may also ask the court to rewrite the contract to more accurately reflect the intent of the parties. This remedy may be appropriate in cases of misrepresentation or mistake regarding a specific term of the agreement.
While this post offers a broad overview, contract remedies are specific to the specific agreement and circumstances of the parties. Therefore, it is imperative to consult an experienced business attorney who can evaluate all of your options.