Business contracts should make standard business operations relatively predictable. Organizations hire workers or service providers to perform critical functions for the company. They lock in prices and delivery dates with vendors. They negotiate leases or license intellectual property. Contracts help companies protect their interests, control operating expenses and limit liability.
Unfortunately, contract breaches are relatively common. A change in leadership at an organization might lead to delays in deliveries. Construction companies may perform work that does not meet the standards set in an agreement with a business client. Employees who signed contracts with non-disclosure agreements may publicize trade secrets on social media or use insider information to start a competing business.
Contract litigation is a useful tool for organizations harmed by breached agreements. How can the courts resolve breach of contract disputes?
Judges have the authority to remedy contract issues
Civil court judges can provide several different types of recourse to organizations harmed by breach of contract scenarios. In some cases, judges can provide rescission or a formal cancellation of the contractual arrangements.
In other scenarios, courts can offer injunctions. A judge can prevent a former employee from continuing to misuse trade secrets or speak in a damaging manner about their previous employer online. Judges can also order specific performance. They can require that a vendor make a delivery or that a service provider complete a project.
Financial compensation is also a viable solution after a breach of contract lawsuit. Plaintiff organizations can present evidence to the courts of the harm caused by the breach of contract. The courts can then award damages based on those losses. Judges can also enforce penalty clauses integrated into contracts that impose financial consequences for misconduct or a failure to perform.
Reviewing the contract that another party has breached and any relevant documentation of alleged violations can help those considering contract litigation determine the best type of relief to seek when filing in the civil courts. Organizations that take action after a breach of contract may limit the harm caused by another company or a former employee.