Consequences of Breach of Contract Cases in Maryland

After a contract is formed, both sides are legally required to hold up their end of the agreement.  When one side refuses to comply, can’t meet the terms, only performs partway, or makes it impossible for the other side to complete the contract, they may be in breach.  If you are accused of breach or think another party has breached a contract with you, your case may ultimately end up in court.  Breach of contract claims have a list of potential “remedies” that courts can use.  Baltimore breach of contract attorney William Heyman explains the compensation and other remedies for a Maryland breach of contract lawsuit.

Types of Remedies for a Baltimore Breach of Contract Claim

Whether you are suing for breach of contract or are being accused of breaching a contract with a client, it is important to understand the remedies associated with breach cases.  Courts have limited options when addressing a breach of contract case, and the remedies they use will depend heavily on what the contract was supposed to do.  For instance, sales contracts are intended to provide one side with an item, and the other with payment – so the remedy will often deal with monetary damages.  On the other hand, contracts dealing with real estate may result in a court ordering one side to follow through on their promises.  Regardless, the remedies usually fall into one of these five categories:

Monetary Damages

Monetary damages can come in three general forms.  First, monetary damages may refer to the money that was promised in the contract.  If a buyer breached a contract, the monetary damages may be the money they originally owed.  The second form of monetary damages is usually specific damages agreed upon in the contract.  For instance, in a non-compete agreement, a party may be contracted to pay a certain sum of money if they fail to follow the non-compete terms.  This money can be requested in court as damages for a breach of contract.

The third form of damages is often the broadest.  These are “consequential” damages, which result because of the breach.  For instance, if a buyer is relying upon receiving items or services in order to complete a product or a service, they may be unable to complete their project without the items.  If they lose money because the seller did not deliver, the seller may be liable for the costs the breach caused the buyer.  Consequential damages can include the costs of replacement items or services, the expenses of hiring someone else to do the job, and many other costs incurred as a consequence of the breach, according to our Columbia Breach of Contract Attorney.

Specific Performance

Some contracts are written to force someone to do something.  In many cases, monetary damages compensate parties when a contract is breached.  For example, if a seller fails to deliver on a product, the product can be replaced with products from a different seller, and the breaching party can pay the difference in cost.  However, sometimes contracts, such as those dealing with conveyances of land, deal with specific items or services that cannot be replaced.  When one party fails to perform, the court can order them to do what they were supposed to do.  This remedy is known as “specific performance.”

Specific performance is very common in contracts involved in real estate disputes.  Every piece of real estate and every building is unique and has a unique location.  These are not interchangeable, and if one party fails to turn over a piece of property, the other party may not be satisfied by buying different property instead.  In these cases, courts often force the parties to perform as required, using specific performance remedies.

Rescission

Sometimes, the court’s best choice is to simply unmake the contract in a move known as rescission.  Rescission comes up primarily in cases where the contract should not have existed in the first place, including situations where:

• One party was incompetent (e.g. underaged or mentally incompetent),
• There was duress or undue influence,
• There was fraud, or
• There was mistake (e.g. a party did not actually own the rights or property conveyed).

When this happens, the only fair remedy is to undo the contract and restore the parties to the way they were before the contract was formed.

Restitution

When a court undoes the contract through rescission, it often orders parties to pay money or return assets to restore both sides as closely as possible to their status before the agreement was made.  These orders to restore the parties are paid through restitution damages.

Reformation

Rather than destroy the contract, the court may simply edit it.  This could realign the terms of the contract with the parties’ original intent or create a more fair and just version of an otherwise illegitimate contract.  Basically, this “reformation” is the court’s attempt to save a contract rather than undo it.  Going forward, parties will work off of the new contract, as edited by the courts.  Courts typically avoid this, as it substitutes the court’s will for the will of the parties.

Maryland Breach of Contract Attorney

The Heyman Law Firm represents corporate clients and individuals in contract disputes and other transaction and litigation matters.  To schedule a consultation with Maryland business and litigation attorney William Heyman, contact our law offices today at (410) 305-9287.