Contracts are an important part of many business transactions nowadays and have been for decades. They operate as legal agreements between the parties, which outline the expectations each party has for the other. However, breaches of contract happen quite often. When contracts are breached, disputes and oftentimes, other types of harm can occur and negatively affect the involved parties. In North Carolina, as in most other jurisdictions in the United States, a range of remedies exist and are available to address any breaches of a contract and provide relief to the non-breaching party. Many of these remedies aim to put the non-breaching party in the same position they would have been in had the breach not occurred, though others try to put the non-breaching party in the position they would have been in had the contract never been made.
One of the most well-known remedies for a breach of contract is specific performance. Specific performance generally involves compelling the breaching party to fulfill the obligations they agreed to perform under the contract. Courts consider specific performance as a viable remedy when the subject matter of the contract is unique or when compensating the non-breaching party with a monetary award would not adequately compensate them. While specific performance is only granted in limited circumstances, it can be an effective remedy, especially in cases that involve real estate, the sale of unique assets, or contracts involving personal services.
Among the most common forms of remedy offered in cases involving a breach of contract is monetary damages. In North Carolina, two types of monetary damages can be granted to a non-breaching party: compensatory and consequential damages. Compensatory damages aim to place the non-breaching party in the position they would have been in had the breach never occurred. Oftentimes, compensatory damages cover direct losses, such as the cost of purchasing goods or the cost of repairs. On the other hand, consequential damages cover losses that occur as a more indirect result of a breach of contract, such as lost profits.
Another form of damages that is a fairly common remedy for a breach of contract is liquidated damages. Liquidated damages refer to a damage amount that is predetermined in the contract and is required to be paid by the breaching party to the non-breaching party when they breach the contract. In North Carolina, liquidated damage clauses are enforceable as long as they represent a reasonable estimation of the damages that the non-breaching party is anticipated to suffer if a breach were to occur. However, if a liquidated damages clause is deemed excessive or disproportionate to the actual harm suffered by the non-breaching party, a court may consider it a penalty and refuse to enforce it.
Recession and restitution represent another form of remedy that a non-breaching party could invoke in the event of a breach of contract. Rescission involves canceling the contract and taking action to put the parties in the positions they were in before the contract was formed. This remedy is typically sought when the contract is invalid based on fraud, misrepresentation, duress, or mistake. Similarly, restitution focuses on restoring the non-breaching party to the position they were in before performing under the contract. If restitution is ordered by the court, the breaching party will be required to return any benefit conferred or payments made to them by the non-breaching party.
Overall, North Carolina law offers several remedies for an injured party when a breach of contract occurs. If you believe a breach of contract has occurred, the lawyers at King Law can help you get a better sense of where you stand. We invite you to come in and talk with one of our attorneys on the phone or in person during a consultation. King Law has offices in western North Carolina and upstate South Carolina conveniently located to serve you. Call 888-748-KING or visit our website to request a consultation.
