A personal contract is an agreement that legally binds a representative as an individual. For instance, these can include employment agreements, rental agreements, loan agreements, and others that meet the criteria of individual contracts.
Furthermore, a personal contract is a written contract between an individual and themselves, outlining their personal goals, values, and commitments. The agreement can also specify particular obligations and duties that need to be fulfilled in the personal contract.
What Are Some of the Remedies That Can Be Obtained in a Contract?
After a breach occurs in a contract, the wronged party has a right to be compensated for any damages as a consequence of the breaching party’s failure to perform on their part. There are several ways a court can award damages to the parties. Depending on the contract and the conditions, the court will determine the path forward.
The following are some of the remedies granted for breaching a contract:
- Compensation or monetary damages;
- An injunction;
- Specific performance;
- Contract rescission;
- Contract reformation.
Monetary compensation is considered the most common legal method for awarding a remedy for a breach of contract. The basic purpose of damages is to have the wronged party be in more or less the same position that they would have been in had the breaching party fulfilled its promises and the contract been performed.
Additionally, the compensatory (actual) damages of this kind come in three major forms:
- Expectation damages: a substitute performance can be authorized for the wronged party if they decide to with a similar contract;
- Reliance damages: this is intended to place the wronged party in the same position that it would have been in if the contract had never been formed; and
- Consequential damages: intended to excuse the wronged party’s particular situation.
Another type of damages includes punitive damages that are awarded to the wronged party when a contract has been breached. This sort of damage is used in rare cases. They are in place to prevent parties from severely deviating from their contractual duties. They are awarded in addition to compensatory damages to the wronged party. In these circumstances, the breaching party acted in a way to purposefully defraud or recklessly harm the other party in the contract.
Moreover, in some cases, the court may order an injunction. An injunction is a court order prohibiting the breaching party from doing something or demanding the breaching party to do something. More cases require specific performances as a result of a breach of contract. Specific performance is an equitable remedy through which the court orders the breaching party to fulfill its promises adhering to the contract or potentially be held in contempt of court.
Specific performance is only potentially an option as a remedy when rare or unique goods (famous paintings) are part of the case. This is used rather to resolve the dispute if a substitute contract will not help the wronged party. Typically, a wronged party may sue for specific performance only in the event of a material breach. Lastly, in a contract rescission, the contract becomes void or canceled.
How Does the Court Determine to Award Damages in a Contract Case?
There are several factors a court will evaluate before awarding any monetary compensation to the wronged party in a contract case. Below is a brief overview of these considerations by the court.
First, the court will decide on causation. The initial inquiry is to determine whether and to what extent the breach of contract caused the wronged party’s losses. Depending on the contract, the wronged party will only be compensated for direct losses. Next, the court analyzes the aspect of foreseeability. The court will determine if the losses were foreseeable or not for the breaching party.
Another factor the court will view is calculability. This examines if the parties were able to accurately measure the losses that need to be compensated. Lastly, the court will determine whether or not the parties could have avoided the losses. Figure out if the wronged party would have prevented any of the losses if they were able to.
What Is the Purpose of Remedies?
There are different theories as to the purpose of remedies in the breach of a contract. The court wants to place the wronged party in a position they would have been in if the breach had not occurred. The two categories of remedies are legal and equitable. In the context of legal remedies, damages are ordered. Damages are monetary compensations paid by one party to another.
As stated earlier, there are other types of damages. In the context of equitable remedies are the three major types, which include specific performance, injunction, and restitution. All these have been briefly mentioned earlier.
Generally, in contract cases, compensating the wronged party is much more common than actually ordering them to do a specific performance. It is the opinion that some duties change after a breach of contract. The contract shifts and the circumstances are no longer the same as under the previous conditions. Therefore, it may not be as compelling to perform on the contract once it has been breached in a certain way.
However, in some cases, the court orders the breaching party to carry out a certain duty obligated to them through the contract. All parties under contract law must perform their particular duties. However, life happens, and pirates are no longer able to carry out these tasks. Therefore, creating a way to provide a remedy for the wronged party is crucial in contract law.
Are There Any Limitations on the Award of Compensatory Damages?
One of the main limitations on the award of damages is the duty to mitigate. The non-breaching party is mandated to mitigate or minimize the amount of damages to a reasonable extent. Damages cannot be recovered for losses that could have been reasonably avoided or substantially mitigated after the breach happens.
The non-breaching party’s failure to utilize reasonable diligence in mitigating the damages implies that any award of damages will be reduced by the amount that could have been reasonably avoided. The court determines the final order for reasonable damages according to each case.
How to Avoid a Breach in Contract?
Before signing any contract, you should thoroughly review it and have your contract lawyer examine it, too. You can prevent a contract breach if you are diligent and pay attention to the following considerations:
- Transparency and clarity: before you draft an agreement, make sure that you have the proper language embedded in it and that there is a clear understanding of each party’s roles;
- Expectations: both parties should have an understanding of how to fulfill the roles specified in the contract and be able to abide by them. The expectations should be clear and communicated openly to avoid any misunderstandings in the future and;
- Legality: make sure that the contract is legally binding and does not ask you to do anything illegal. If you are not sure about this, you can consult with a local contract lawyer.
When Do I Need to Contact a Lawyer?
If you signed a personal contract, you need to ensure that all your obligations are met and adhered to. If you suspect there has been a breach in your contract, you can reach out to a local contract lawyer to assist you with your case. There are legal remedies available for you to be compensated for if there is a breach of contract.
