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What are the remedies for a breach of contract?

If you enter into a business contract in Texas, be sure to read it carefully and take it very seriously. A contract is a legally binding agreement between two or more parties. If you fail to live up to what you promise in a contract, a breach can occur, and the other party can sue you. Should the court make a decision in the other party's favor, there are a number of often onerous penalties you may face as a result. 

According to FindLaw, the general expectation is that after a breach of contract, you will have to do something to remedy the situation. There are three main remedies for a breach of contract.

1. Specific performance

A specific performance occurs when the court orders you to perform the duty that you owe to the other party according to the terms of the contract. The court may require a specific performance when damages are not sufficient.

2. Damages

The most common remedy for a breach of contract involves paying damages to the other party. Rarely, these damages may be punitive, meaning that the court intends to punish you by requiring you to pay more than what would recompense the other party. More often, the damages are compensatory, meaning that you must pay only enough to make up for the effects of the breach to the other party. If the other party did not experience actual money loss, the court may require you to pay a token amount in nominal damages. 

3. Restitution and cancellation

If you received a benefit from the other party prior to the breach, restitution means that you must return the other party to the status quo that existed at that time. Cancellation means that the other party voids the contract, meaning that neither you nor the other party need fulfill its obligations any longer. 

The information in this article is not intended as legal advice but provided for educational purposes only.



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