Businesses typically execute contracts in good faith, which means the party signing intends to uphold the agreement. They expect that employees, vendors or service providers that sign agreements with them will also do their best to uphold the terms of those agreements.
Contracts can make business operations and expenses more predictable and, therefore, more controllable. They can help deter bad behavior and can create penalties for issues such as late payments or breaches of non-disclosure agreements. Despite having written agreements on record, some businesses do not follow through on the promises made to other organizations.
A breach of contract scenario could leave a company struggling to continue operating due to a lack of support services or raw materials. It could cause financial challenges if the failure of another party affects their ability to fulfill obligations to others. Breach of contract issues may end up going to civil court due to the potentially consequential implications of the breach. What remedies can the courts offer those struggling with the consequences of a contract breach?
Judges can enforce contracts or penalize those that breach it
A judge hearing a breach of contract case in civil court will typically consider several different solutions. The first step in the process will require reviewing the contract and ensuring that it is a valid and enforceable document. The judge will also need to see evidence affirming that a breach occurred.
Provided that the contract is valid and the claims of a breach are accurate, the judge can then determine what the best solution would be given the circumstances. Sometimes, they can help enforce the contract by ordering specific performance. A judge can effectively order one party to abide by the original agreement or fulfill certain tasks that would properly resolve the conflict.
Other times, judges can terminate the contract as a way to release the company affected by the breach from future obligations to the other party. Civil court judges also have the legal authority to order one business to pay damages to another when their actions or inaction have caused calculable financial consequences. Judges can even enforce clauses in contracts that impose penalties for certain contract violations.
Taking a contract breach matter to civil court is one of the most effective ways to resolve an issue with minimal consequences for the party that did not violate an agreement, generally after an attempt at negotiating with the breaching party has failed.