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6 Options When You Are the Victim Of A Breach Of Contract
In most circumstances, when we signed up for a contract, we expect the other party to adhere to the terms agreed.
But in reality, things often don’t happen as planned.
Sometimes the other party just cannot deliver on commitments made previously because of dynamic changes that occurred. Sometimes people found out after making the agreement that they are on a losing deal and decides not to honor the contract. And sometimes, your enemies are just out to screw you over.
When there is a breach of contract, the innocent party has 6 courses of action to consider.
1) Partial performance
Despite the injustice that the victim might feel, accepting partial performance of the agreed works can make sense and be most practical.
Going to court for every little matter which you feel wronged will leave you a very busy landlord.
For example, if you hired a plumber to replace the pipes and made payment after the works, you might think that everything is fixed. But a few hours later, you find that one of the connecting pipes is loose and leaking.
You could of course call the plumber back in to fix it. Or you could just tighten the connection to fix the problem in 2 minutes.
In this case, most people would just do it themselves and accept the partial performance delivered by the service provider.
2) Unilateral Rescission
In layman terms, unilateral rescission is to refuse to uphold the obligations in the contract because the other party is doing exactly that.
For most people, this is a natural, instinctive response.
Why should you make payment on a service when you are not getting any service?
However in the real estate world, any consideration of unilateral rescission should be discussed with an attorney before any action is taken.
This is because there are various laws specific to how real estate operations should be managed. And different states can have differing laws regarding these matters as well.
If a service provider is not performing due to specific reasons and will willingly perform then if certain terms of the contract are amended, then a novation can be considered.
A novation is simply substituting the existing contract with a new one.
3) Mutual rescission
Mutual rescission is different from unilateral rescission in that this time, both parties agree to have the contract cancelled.
In many events, mutually agreeing to void a contract makes the most sense.
You would save more time, and possibly get things done even faster if you just go out and hire someone else for a job.
When there is a mutual rescission agreed, it is best practice to draw up an agreement to cancel with all parties signing on the written document.
4) Sue for damages
While it can be a source of gossip among your social circle when you declare that you are suing a party for money damages, it is not something to laugh over.
If the damages suffered by the innocent party can be reasonably expressed in terms of monetary value, this provides a basis to sue to money damages.
This is where it can start to get wild.
Just read the news stories detailing how end users of defective consumer products can sue manufacturers for millions of dollars.
If a tenant rents a room for $200 and finds that it is unlivable, he can sue for that $200. On top of that, with a slick lawyer, he might also claim psychological impact, loss of job due to being unable to perform at work due to the room, or even an aggravation of medical condition.
5) Sue for specific performance
Certain times, it will make more sense to get the other party to perform something rather than to pay money damages.
For example, if you had made a deal to purchase a piece of under-valued real estate and the seller backs out at some point after realizing his mistake of undervaluing the property, you can file a lawsuit for a court order to have the remainder of the contract carried out.
In this situation, since you can be sure that the seller would go all out to prevent the deal from going through, the key here is to have a valid written contract and that you have carried out all your obligations on your end.
6) Liquidated damages
Liquidated damages are terms agreed in a contract depicting the amount of damages to be be paid should there be a breach of contract.
This helps remove the guess-work for calculating and estimating damages.
But be mindful that liquidated damages serve more as a deterrent against parties from breaching the contract.
By knowing how much they will be liable for for non-performance, it is something to ponder about before one decides not to abide by the agreement.