Business relationships are built and protected with contracts. These legal agreements ensure that two parties are on the same page with regard to matters like performance, security, payment and expectations.
When a contract is breached, these relationships break down. More importantly, breaches can jeopardize the non-breaching party’s business. However, there are remedies available, of which New York City business owners should be aware.
A breach can cause financial damages for the non-breaching party. For instance, if a former employee discloses confidential information despite signing a non-disclosure agreement, the breach can result in loss of a competitive edge and business.
Under these circumstances, non-breaching parties can receive financial damages to compensate them for their loss.
Performance of duty
When a breach involves failure to perform a specific duty, the courts can order the breaching party to complete or fulfill that duty. An example of this might be a party refusing to sell property despite an agreement promising the sale. The courts can order the breaching party to complete the sale in accordance with the contract.
Specific performance is generally only an option when the subject matter or duty involved is considered unique.
Contracts can also be cancelled when they are breached. Contract termination ends each party’s obligations, and the non-breaching party typically pursues restitution that may be available.
Restitution is a means of restoring the non-breaching party to the status quo. In other words, the breaching party will be required to pay back any money taken from the non-breaching party, and forfeit any other financial gains.
Protecting your business from breaches
These remedies can certainly be helpful for a party who has been affected by a serious, or material, breach of contract. However, it is generally preferable to avoid breaches in the first place.
You can do this by working with an attorney at Rich Michaelson Magaliff Moser, LLP to draft a thorough, enforceable contract that clearly defines expectations, details what breaches might occur and includes early termination provisions, if appropriate. These measures can help you avoid breaches and costly contract dispute legal battles.