Contracts make the business world function effectively. When utilized properly, these documents can spell out expectations amongst parties to an agreement, which may include business entities and consumers in Ohio. Although the purpose of a contract is to try to provide clarity and thereby avoid conflict, quite frequently the terms of a contract are not adhered to, whether this means a payment for goods is not made, an agreed upon service is not rendered or performance of the contract is made inadequately. When this happens, the contract has been breached.
In the event of a breach of contract, the affected party has four options. The first is to do nothing and simply take the loss. This is not advisable, as it may damage a business’s reputation and bottom line. It may also work against it in future litigation regarding similar issues. The second option is to file a lawsuit seeking damages. This is the most commonly pursued remedy. Most often, the affected party merely seeks compensation to be placed in the same financial position it was in prior to the breach. However, an amount of liquidated damages can be spelled out in the contract, which would replace the need for a calculation of compensatory damages.
The third remedy for breach of contract is specific performance. Here, the affected party requests that the breaching party be court-ordered to adhere its contractual obligations. Usually this option is selected when the work to be performed under the contract is unique in some way. The fourth remedy that can be sought is cancellation of the contract and restitution. Financially, this is the same as seeking compensatory damages. However, here an affected party also requests release from the contract and its remaining terms.
There can be a lot at stake in breach of contract cases. To protect one’s bottom line, business litigation may be an option to consider in the event of a breach of contract. By filing a lawsuit, an individual or business can seek to protect its reputation and finances, which is no small thing in the business world.