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What happens if either party breaches a contract?

In certain circumstances, contracts will be breached if one party fails to perform the terms of the agreement within the contract. If the terms of the agreement have been breached, the guilty party can be subject to potential punishments such as compensatory damages and discharge from the original contract. In a breach of contract, the injured party will be required to take steps in order to minimize subsequent losses.

Either party could be entitled to punitive damages, compensatory damages, liquidating damages, rescission or cancellation, or specific performance.

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  • What are liquidating damages?

    Liquidating damages are the potential damages specified as the total amount of compensation in which the aggrieved party will be able to seek, if the other party involved breaches the contract. Liquidated damages are predetermined prior to entering the contract, and for it to be legally enforceable, the nature of the contract should be such that it is difficult to determine actual damages as well as reasonably foreseeable damages should they occur.