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Understanding Breach Of Contract


You may find it strange to have to sign contracts for various reasons, but as you begin your business, you’ll start to see why. Business contracts are needed for legal reasons. Without a contract in place, one party could renege on their obligations and this could be costly.

But even when there is a contract in place, a party could fail to fulfill their end of it in some way. This is called breach of contract and this can occur when someone violates any term or condition of the agreement. Oral contracts can be breached as well.

Examples of Breach of Contract

Breach of contract can happen in a variety of ways. For example, if you hire an electrician to use a certain type of high-quality wire for a project, but instead the electrician uses a wire of inferior quality in order to save money, then that would be considered a breach of contract.

Another example would be if you hired someone to do a specific job, such as an employee for a project. If you had a contract and the employee did not complete the project (because they terminated their employment, for example), then that would be a breach of contract.

A breach can range from minor to serious. It could include things such as an incomplete job, a missing payment, a lack of insurance, or using or substituting the wrong materials.

What Are My Legal Options?

Typically the contract itself will detail the remedies for breaching the contract. The penalties are often monetary in nature. The contract may require that the breaching party fulfill the terms of the contract or pay a hefty fine.

The remedies may include one of the following:

  • Compensatory damages. This is the most common remedy for a breach of contract. Compensatory damages compensate you for the economic losses you incurred due to the breach.
  • Specific performance. This is when the court orders the breaching party to fulfill their end of the bargain. Specific performance is ordered in unique situations, such as when monetary damages won’t adequately compensate you.
  • An injunction is sort of the opposite of specific performance, in that the court orders a party not to do something, such as bad behavior that is affecting the terms of the contract.
  • Liquidated damages. When it might be difficult to calculate the right amount of monetary damages, a business contract might include liquidated damages, or a specific sum, as compensation for a breach of contract.
  • Rescission allows the party who did not breach the contract to cancel the contract. This allows them to just refuse to complete their end of the bargain.

Learn More About Business Contracts

Businesses need to have contracts in place when they work with vendors or hire employees. Contracts provide legal protection and without them, a business could face a variety of legal problems.

Orlando business contracts lawyer B.F. Godfrey from Godfrey Legal can provide guidance and protection for your business. To schedule a consultation, fill out the online form or call (407) 890-0023.



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