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What to Do After a Breach of Contract: A Step-by-Step Guide

Updated: May 16, 2023

Est. Reading: 5 minutes

When a breach of contract occurs, it is important to take immediate action. A breach of contract can have devastating consequences for businesses and individuals, including economic losses, financial losses, and even termination of business relationships. The goal of contract law is to provide a remedy for those affected by a breach of contract.

This guide explains what to do after a breach of contract, including types of breaches, remedies for breach, potential defenses, and why you must consult an experienced business law firm for effective legal guidance. Call us today at (623) 300-2727 to get started.

What is Considered a Breach of Contract?

A breach of contract is an act that fails to fulfill an obligation outlined in a binding agreement between two or more parties. The terms of the agreement must be clear and enforceable, and both parties must have intended to enter into the contract.

A breach of contract can include failing to perform duties on time, not delivering on agreed-upon terms, and not paying the contract price or other forms of payment. Breaches of contracts can be either material or minor, depending on the severity and impact of the breach.

Types of Breach of Contract Claims

When a breach occurs, there are several types of claims that may be brought by the non-breaching party for monetary damages. These claims may include compensatory damages, consequential damages, nominal damages, expectation damages, and punitive damages.

a sheet of paper with a contract on it torn in half
  • Compensatory damages are intended to restore the non-breaching party to its economic position prior to the breach.
  • Consequential damages are those that were foreseeable at the time of entering into the contract.
  • Nominal damages are awarded when a minor breach has occurred, but there is no real economic loss.
  • Expectation damages are awarded when a party seeks to be placed in the position they would have been had the contract not been breached.
  • Punitive damages may also be awarded if the breach of contract was intentional and malicious.

Can I Sue for Breach of Contract?

If a breach of contract has occurred, the non-breaching party may bring legal action for breach of contract. It is best to consult with an experienced attorney knowledgeable in business law before taking any legal action. A lawyer can advise on the potential damage that could result from filing a breach of contract lawsuit and provide guidance on the best course of action.

What is a Common Remedy for Breach of Contract?

A common remedy for breach of contract is monetary damages. Money damages are intended to compensate the non-breaching party for any economic losses that occurred due to the breach. This includes actual losses, as well as consequential and foreseeable losses. In some cases, a court may also order the breaching party to perform their obligations under the contract, which is known as "specific performance".

What are Some Other Types of Remedies for Breach of Contract?

In addition to monetary damages, other types of remedies for breach of contract include a release from contractual obligations and an extension of time. A release from contractual obligations is available when a fundamental breach of contract has occurred. An extension of time may be granted if the breaching party can prove that unexpected events have prevented them from performing their obligations under the agreement.

Is Breaching a Contract a Crime?

In some cases, breaching a contract may be considered a crime. If the breach is intentional and malicious, it may be grounds for criminal prosecution. However, this is generally only true in cases where there was fraud involved or the breach caused significant financial losses through a criminal act.

That said, the majority of breach of contract cases are brought as civil matters. This means the parties involved must enter into an adversarial process in order to resolve the dispute.

What Are the Consequences of Breaching a Contract?

The consequences of breaching a contract can be significant. Not only can the non-breaching party suffer financial losses, but it could also significantly damage business relationships and cause reputational damage. In addition, the breaching party may have to pay monetary damages or face criminal prosecution if the breach was intentional and malicious.

Steps on How to Avoid a Breach of Contract

When a breach of contract occurs, there are indications that the parties have failed to fulfill their obligations. In order to prevent a breach of contract, both parties should take steps in advance that will help ensure the terms of the agreement are met. These include the following:

Draft Clear and Comprehensive Contract Terms

When creating the initial agreement, it is important to make sure that all terms are clearly outlined in writing. This should include any payment plans or time frames for the completion of tasks. Moreover, both parties should take the time to read and understand all of the terms before signing.

Learn More: What to Include in a Contract

Use Standard Contracts

If possible, use standard contracts that have been reviewed by a qualified legal professional. This will help ensure that all the terms are legally enforceable, and can provide both parties with added protection.

Respect Deadlines

It is essential to meet all deadlines outlined in the contract. Even if the other party fails to meet the expected time frame, both parties should attempt to work out a compromise in order to avoid any potential breach of contract.

Monitor Performance

It is important to monitor performance and make sure all obligations under the contract are being met on time. If any issues arise, it is important to address them as soon as possible. For example, if one party fails to make a payment on time, the other party should reach out promptly to attempt to resolve the issue.

a contract, pen, and glasses on a desk

Communicate Clearly

Poor communication can lead to misunderstandings that can result in potential breach of contract scenarios. To avoid this, both parties should communicate openly and regularly about any changes to the agreement. Also, should any issues arise, it is important to discuss them in order to reach a mutually beneficial solution.

Consult an Attorney

If a dispute arises, it is best to consult with an attorney familiar with contract law and business disputes. An experienced attorney can provide advice on the best legal strategy for resolving the issue.

Use Alternative Dispute Resolution Methods

When possible, it is always advisable to use alternative dispute resolution methods to settle a contract dispute. More often than not, parties are advised to include a dispute resolution clause in their initial agreement.

This can help avoid any potential litigation and provide both parties with an efficient, cost-effective way to resolve the issue. This may include arbitration or mediation, which can be less costly and time-consuming than the adversarial process of litigation.

Speak with Patrick Monahan Today!

If you have questions about a breach of contract or need help with a contract dispute, contact our experienced attorneys at Monahan Law Offices today. We can help you understand your legal rights and obligations under a contract and provide advice on how best to approach a potential breach of contract situation.

Our attorneys have extensive experience in handling breach of contract cases and can help you resolve your dispute in a timely and cost-effective manner. Schedule an initial consultation through (623) 300-2727 to discuss your contract dispute today!

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Attorney Patrick Monahan

Patrick Monahan

Patrick Monahan is the managing partner of Monahan Law Firm, PLC. Patrick began his legal career practicing real estate, construction, and general business litigation.
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