A contract is a legal agreement that outlines responsibilities and obligations of each party that signs it. When a party does not conform to a term in the contract, it is a contract breach.
There are legal remedies for a breach of contract, but the contract must contain certain elements in order to be enforceable.
Elements that make a contract valid
There are basic elements that make a contract valid:
- It must be mutually agreed upon between parties that are of sound mind
- There must be a clear definition of the terms
- Each party must have adequate time to read and review the contract
- The contract cannot relate to activities that are illegal
For many contracts to be valid, they must be in written form, but there are exceptions.
Remedies for a contract breach
If a contract contains all the required terms, and each relevant party signed it, a party can take legal action if another party does not follow through with all of a contract’s terms. FindLaw outlines the various remedies, or money damages, for breach of contract. The most common remedy is compensatory damages, which means the party who breached the contract must pay the amount of money the other party pays for services from another place.
Nominal damages are for when none of the parties suffered harm due to the breach. Restitution means that the breaching party must pay the other party back the amount paid for a service or product. A party may owe punitive damages when the contract breach involved a morally reprehensible action.
The court may also order a cancellation of the contract or force the party that breached the contract to perform the promised service.
