What remedies are available for a breach of contract?

Contracts are entered into regularly by all of us, whether that be as consumers, suppliers, shareholders, investors – the list goes on. But what happens when one of the parties fails to adhere to their contractual obligations and breaches the contract? What remedies are available to the innocent party? This blog will outline the various remedies available in a breach of contract matter and the circumstances in which they may be awarded.

Repudiation

If another party to a contract fails to comply with the terms agreed, the innocent party may be entitled to ‘repudiate’ the contract, releasing themselves from any further obligations contained within the contract in addition to claiming against the wrongful party for any losses suffered as a result of the contract not being performed.

Alternatively, they may ‘affirm’ the contract, agreeing to continue with it despite the wrongful party’s breach, but reserving rights to claim against the wrongful party for any losses sustained as a result of the breach.

Damages

Perhaps the most common remedy for breach of contract is damages – monetary compensation for losses suffered by the innocent party.

Damages can come in two forms – ‘special’ damages and ‘general’ damages. Special damages are awarded for sums that can be easily quantified, such as a loss of profit, whereas general damages are awarded for losses that are not easily quantifiable such as loss of amenity.

It is important to note that damages are not awarded simply to punish the party in breach, but to ensure that the innocent party is placed in a position it would have been had the breach not occurred. Further, there are restrictions upon the extent to which damages may be awarded and a number of factors that ought to be taken into account by a party who has found themselves subject to another’s breach and careful consideration should be given to this.

Specific performance

If damages are unlikely to be adequate in the circumstances, an alternative would be to request an order from the Court for specific performance, requiring the party in breach to perform its positive obligations within a specified time frame.

Circumstances in which damages may be deemed as inadequate could include situations where the subject matter or product of the contract is unique and cannot be reasonably substituted or when damages would be financially ineffective in rectifying the position for the innocent party.

If you are party to a contract which has been breached and require advice or assistance with regards to the same contract our Dispute Resolution team on  01604 828282 / 01908 660966 or email litigation@franklins-sols.co.uk.