Breach of Contract: What Remedies Are Available?
At Smid & Merchant, located in Fishers, Indiana, we know that entering into a contract is a significant step for any business or individual. A contract represents an agreement between parties, and when one party fails to fulfill their obligations, it can lead to a breach of contract.
As experienced contract law attorneys, we understand the impact a breach can have on our clients. If you’ve been affected by a breach of contract, it’s essential to know what remedies are available to protect your rights and interests.
A breach of contract is when one party fails to perform their obligations under the terms of a legally binding agreement. This failure can take various forms, such as failing to deliver goods or services, missing deadlines, or delivering subpar work.
In Indiana, the law provides several remedies that can help make the situation right. Whether you need compensation, specific performance, or contract cancellation, understanding your options can help guide you through the process.
Types of Breach of Contract
Before diving into the remedies available for a breach of contract, it’s important to recognize the different types of breaches that can occur.
Minor breach (Partial breach): This happens when one party fails to meet some terms of the contract but the overall agreement is still largely fulfilled.
Material breach: A material breach occurs when one party’s failure to perform goes to the heart of the contract, undermining the purpose of the agreement. This often entitles the non-breaching party to terminate the contract.
Anticipatory breach: This happens when one party indicates, either through their words or actions, that they will not fulfill their obligations under the contract before the performance is due.
Each of these breaches comes with its own set of remedies and potential consequences, so it’s important to identify what type of breach has occurred in your case.
What Remedies Are Available for a Breach of Contract?
If you've experienced a breach of contract, there are a number of legal remedies you can pursue. These remedies are meant to provide the non-breaching party with compensation or other forms of relief.
Compensatory Damages
Compensatory damages are the most common remedy for a breach of contract. These damages are awarded to compensate the non-breaching party for the losses suffered due to the breach. In general, the goal of compensatory damages is to place the non-breaching party in the same financial position they would have been in if the contract had been fully performed.
Direct damages: These are losses that occur directly from the breach of the contract, such as costs incurred to obtain substitute goods or services.
Consequential damages: These are losses that are not directly tied to the breach but flow from it, such as lost business opportunities or profits.
In order to recover compensatory damages, the non-breaching party must prove that the damages were caused by the breach and that they were foreseeable at the time the contract was made.
Consequential Damages
Consequential damages, also referred to as special damages, cover losses that occur as a result of the breach but are not directly caused by it. These types of damages can include loss of business, loss of reputation, and other indirect losses. It’s essential to be able to prove that the damages were foreseeable when the contract was formed in order to recover consequential damages.
Liquidated Damages
Liquidated damages are a predetermined amount that the parties agree upon at the time the contract is made. These damages are specified in the contract and are meant to compensate the non-breaching party in the event of a breach. Liquidated damages are most commonly used in construction contracts, where delays or failures can result in significant losses.
While liquidated damages can be a convenient solution, they must be reasonable. If they are deemed excessive or punitive in nature, they may not be enforceable in Indiana courts.
Specific Performance
In some cases, a breach of contract may not be easily compensated by money. When the subject matter of the contract is unique, such as real estate or one-of-a-kind goods, the non-breaching party may request a remedy known as specific performance.
Specific performance is a court order that requires the breaching party to fulfill their contractual obligations as originally agreed. This remedy is only available when monetary damages are not sufficient to resolve the issue. However, specific performance is not granted in all cases, and the requesting party must show that the breach is of a type that makes specific performance appropriate.
Real estate contracts: Courts are more likely to grant specific performance in real estate contracts because each property is unique.
Personal service contracts: Specific performance is generally not available for contracts involving personal services, as compelling someone to work may violate their rights.
Rescission
Rescission is a remedy that allows the non-breaching party to cancel the contract and be released from any further obligations. Rescission is often used when the contract is fundamentally flawed or when one party’s actions make it impossible for the contract to be fulfilled as originally intended.
There are several reasons a contract may be rescinded, including:
Fraud: If one party made false statements that influenced the other party’s decision to enter into the contract.
Misrepresentation: If one party made statements that were not accurate and caused the other party to make decisions they otherwise wouldn’t have made.
Duress or undue influence: If one party was forced or manipulated into signing the contract.
In most cases, rescission is accompanied by restitution, which means that the parties will return any benefits received under the contract.
Reformation
Reformation is a remedy that involves modifying the contract to reflect the true intent of the parties. This is usually done when the written contract doesn’t accurately represent what was agreed upon, such as due to a mistake or clerical error.
Reformation is more common in cases where there has been mutual mistake, but it can also be used when there has been fraudulent misrepresentation or when the contract does not match what was actually intended.
How to Prove a Breach of Contract
When a breach of contract occurs, it's crucial to gather evidence that supports your claim. Proving a breach requires showing that a valid contract existed, the terms of the contract were not fulfilled by the other party, and you suffered damages as a result. In order to move forward with a legal remedy, the non-breaching party must demonstrate certain key elements.
Elements of a Breach of Contract
To establish a breach of contract claim, the following elements must be proven:
Existence of a valid contract: You must show that a legally binding contract existed. This can include written agreements, oral agreements, or contracts implied by law.
Breach of contract: You need to provide evidence that the other party failed to meet their obligations under the contract. This might include missed deadlines, failure to deliver goods or services, or any other deviation from the agreed terms.
Damages: You must show that the breach resulted in financial loss or other damages. This can include additional expenses incurred due to the breach, loss of business opportunities, or other consequential damages.
Evidence to Support Your Breach of Contract Claim
There are several types of evidence you can present to support your breach of contract claim. These can help strengthen your case and show that the breach caused you real harm.
Written contract: A written contract is the most important piece of evidence, as it clearly outlines the terms of the agreement and the responsibilities of each party.
Communication records: Emails, letters, or text messages that show communication between the parties can be essential in proving the breach. These records can show when the breach occurred and the responses (or lack thereof) from the breaching party.
Invoices and receipts: Documentation of any payments made or services rendered can help demonstrate that you have met your obligations and were expecting the same from the other party.
Witness testimony: If there are witnesses who can testify about the agreement, the breach, or the damages you suffered, their testimony can be valuable in supporting your case.
By collecting and organizing these pieces of evidence, you can present a stronger case and improve your chances of obtaining a favorable remedy.
When Should You Seek Legal Help?
Breach of contract cases can be complicated, and it’s important to act quickly to protect your rights. If you've been affected by a breach, it’s crucial to consult with an experienced contract law attorney. At Smid & Merchant, we have extensive experience in helping clients understand their legal rights and pursue the appropriate remedies for a breach of contract.
If you're unsure of the best course of action, seeking legal counsel early on can help you assess the situation and determine your next steps. Whether you are seeking monetary compensation, specific performance, or contract cancellation, having a skilled attorney can make all the difference.
Contact Us Today
If you’re dealing with a breach of contract in Indiana, don’t hesitate to reach out to Smid & Merchant. We’re located in Fishers, Indiana, and serve Indianapolis, Fishers, Carmel, Noblesville, Zionsville, and the surrounding areas of Indiana, including both Hamilton County and Marion County. Contact us today to discuss your case with a knowledgeable attorney who can help you understand your options and protect your rights.