Remedies for breach of contract
Contrary to what most people might think, the solution for breach of contract is not designed to punish the guilty party, instead it is to protect and preserve the rights and reasonable expectations of the party seeking reimbursement. The purpose of the contract law is that in the event of one party not fulfilling their obligation towards the other party, the party harmed will be compensated for its losses. In most cases the standard solution for breach of contract is money reimbursement, however, in some special cases the court can assign the party to perform a specific performance or injunction. With money reimbursement the court will allow the harmed party to prove to the court the amount of money necessary to reimburse for the losses, in other words, to prove that the amount of money the harmed company is seeking will reflect the guilty company performing the contract. The innocent party has three available options to them, which include self-help remedies, judicial remedies and arbitration.
Self-help remedies centre on lawful acts, which do not involve the option of referring to the court or arbitration. The innocent party under the law may refuse to perform their obligations as stated in the contract until the other party is ready or already has performed its obligations. The solutions of termination and withholding performance are closely related to the seriousness of the breach. Other self-help remedies that the innocent party may use are: deposit penalty taken form the guilty party, set-off, lien, and enforcement of the security. In contracts that involve the sell of goods the innocent party has additional options of stoppage of transit and resale of goods.
Judicial Remedies is an option, which requires the parties to present their case before a court of expert jurisdiction. The options that are available are: to take action for damages, to sue for quantum meruit, to sue for specific performance or to sue for an injunction. In most cases the damages are given to compensate the innocent (injured) party if its expectations have not been meet or if there is a loss of bargain. The award for damages is a substitute remedy, which in common law is reflected by the monetary approach. Common law gives the option to the guilty party to either fulfil the contract or to pay the damages. The Equity law additionally gives the option of granting of specific performance and injunctions to restrain and actual or threatened breach of a negative stipulation. The plaintiff under the common law has the...