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What Happens When Someone Breaks a Contract?

What Happens When Someone Breaks a Contract?

When someone you trusted breaks a contract, the results can be costly. Monetary damages alone can set a business back on its heels and impact its future. Sometimes, that broken contact can even damage the business’ brand and image in the community. Breaking a contract can have long-lasting consequences for everyone involved. What can you do when someone breaks a contract?

What is a Breach of Contract?

A breach of contract occurs when one or both parties does not fulfill the contract that was agreed on. Some breaches of contract are less serious and cause minor damages. Others can go down to the core of the agreement. When a breach of contract is more egregious, it can impact every aspect of the business and the future of both parties involved.

Many breaches of contract disputes can get resolved without the need for litigation. However, some breaches of contract are more serious and lead to civil litigation lawsuits. Those include:

  • Material breaches. This occurs when one party gets less benefit than what was discussed in the contract. Failure to perform obligations on time can fall under this category. You can pursue damages related to the breach and consequences, both direct and indirect.
  • Fundamental breaches. A fundamental breach occurs when a breach of contract has occurred and has resulted in losses. When this occurs, the harmed party can seek compensatory damages, indirect losses, and more.
  • Anticipatory breaches. This occurs when a breach has not yet occurred, but one party has indicated that they cannot fulfill obligations they originally agreed to.
  • Partial contract breaches. This occurs when one party delivers on the contract but failed to fulfill one or some of their obligations in that contract. A late delivery might fall under this category. You can only pursue damages if you suffered financial losses because of that breach.

A knowledgeable Houston civil litigation attorney can review your case to determine what type of breach of contract you endured. If the breach caused you to lose money, halt production, or they simply failed to perform contract duties of any kind, you can file a lawsuit seeking damages.

How to Prove Breach of Contract

When your attorney reviews your case, they will need to determine how best to prove your claim. To prove a breach of contract and take your case to court, your attorney must establish 4 key elements:

  1. A contract between the parties existed
  2. One party broke the contract
  3. You or your business lost money
  4. The contract breach was responsible for this loss of money

If you have a case, the courts will try to compensate you for damages you suffered. However, before you head to the courts, you might consider engaging in alternative dispute resolution methods, such as mediation or binding arbitration. Many contracts require both parties to enter into a specific alternative dispute method.

Remedies for Breach of Contract

When another party breaches a contract, you can sue for damages. The guilty party must compensate the other party for the losses they suffered due to the breach of contract. In many cases, this includes compensation for:

  • Compensatory damages. These are actual losses suffered due to the breach of contract. This might include construction costs or sales fees. The goal is to make the affected party whole – as if the breach never occurred.
  • Punitive damages. These are damages meant to punish the responsible party and prevent future types of breaches. These types of damages are rare.
  • Nominal damages. These are damages awarded to the affected party when there was no monetary loss. This is a token award the courts give.
  • Liquidated damages. This often occurs when both parties outline costs in the contract. The damage amount must be a reasonable estimate.

Calculating damages after a breach of contact is difficult. How can you put a price tag on the loss of brand image or the reputation losses your company suffered? Perhaps your business lost more than just money. Perhaps it lost talented employees or executives in the process? What is the cost of those losses?

As you can see, it is not always easy to calculate all you suffered when someone breaches a contract. For these reasons, it is important to contact an experienced Houston civil litigation lawyer as soon as possible. Your attorney can guide you through the process and protect your rights along the way.

Contact Our Houston Civil Litigation Lawyers

If you are concerned that someone has broken a contract with you, it is important to seek legal guidance. At Roger G. Jain & Associates, P.C., we know how devastating it can be when someone breaches a contract. That’s why we do everything in our power to protect you and your business after a breach of contract. Call at (713) 981-0600 or fill out our confidential contact form to learn more about your legal options.

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