Individuals and small businesses rely on a number of different contracts every day. Almost every daily expenditure, regardless of the size, is based on a contract. This includes everything from car leases to cell phone plans to your utilities bill. If you are holding up your end of the contract and the other party isn’t, you can take them to court and seek one of several remedies for breach of contract.
There are generally two types of remedy for breach of contract in Maryland: legal and equitable. Legal remedies include concepts of financial reimbursement that are calculated to make the non-breaching party whole again. Equitable remedies are reserved for situations where mere monetary compensation wouldn’t be fair to the non-breaching party.
Determining what to pursue in damages after a contract breach can be complicated. To determine the best path forward, we urge you to contact the Maryland contract attorneys at the Heyman Law Firm. We can set you up with an initial case assessment when you call our offices today at (410) 305-9287.
In order to show that the other party breached the contract, you must be able to show all of the following: a valid contract existed, you performed (or would have performed if not for the breach) your end of the contract while the other side did not perform, and that you suffered a loss as a result of the breach.
For a contract to be valid, there must be an offer, acceptance, and consideration. Consideration is an exchange of some value between two parties. Both parties must give up and receive something of value. As an example, an uncle’s promise to give his niece a car on her 21st birthday does not form a promise. However, if the uncle offered to sell his niece the car for $1,000 and the niece accepted, that would be a valid contract.
To be valid, contract negotiations must be voluntary and free of fraud. For instance, the contract would be invalid if the uncle lied and told his niece that the car had automatic transmission if in reality it was manual.
There are a number of other requirements for a valid contract in Maryland. If you are concerned that your contract may not be valid, speak to one of our experienced Maryland contract lawyers.
To prove breach, you must show that the other side failed to live up to their side of the contract. However, you must also be able to demonstrate either that you did live up to your end, or that you were willing and prepared to do so.
To recover damages from a breach of contract, the act of breach must have actually cost you something. You can read more about how to calculate your losses below, but if you have questions on your specific situation, we recommend reaching out to one of our Columbia, MD contract attorneys.
When a breach of contract occurs, the non-breaching party may take the breaching party to court to recover compensation for their losses. Seeking compensation through these legal remedies is more common than seeking equitable remedies, which are covered below.
The following are some examples of remedies for contract breach that you can use to calculate what the breach cost you. Each theory is constructed differently so that you can quantify your loss no matter the type of contract.
Some contracts contain specific language called a liquidated damages clause. This language indicates a pre-set amount for damages if a breach is to occur. There is a fine line between liquidated damages clauses, which are valid, and penalty clauses, which are invalid under Maryland law. You should have your Maryland contract attorney read over your contract to determine if liquidated damages apply.
Compensatory damages refer to the consequences of the breach. If a person decided to open a restaurant and contracted with a carpenter to build the tables, but the carpenter failed to deliver the tables by opening night, the restaurant owner could pursue damages based on the foreseeable and unavoidable loss of revenue from all of the patrons that they could not serve.
Compensatory damages are fairly straightforward. The point of this theory is to place the non-breaching party as close to the position that they were in prior to the formation of the contract as possible. For instance, if you paid for house repairs that were never done, the value of your compensatory damages would be the amount of money that you paid for the unrendered services.
The phrase “quantum meruit” comes from Latin and translates roughly to “what one has earned.” The best way to articulate quantum meruit is to take the above example of house repairs but imagine that the repairs were halfway done when the homeowner informed the contractor that they would not pay the fee. The contractor could sue the homeowner for the value of the services that they had already rendered.
When monetary compensation simply won’t do the non-breaching party justice, they have the ability to seek equitable remedies. The most common of these remedies is specific performance. When a plaintiff in a breach of contract lawsuit is granted specific performance, the court orders the defendant to perform their end of the contract.
Specific performance is most common in breaches of real estate contracts. This is because specific properties often have unique and irreplaceable value to buyers. By winning a decision for specific performance, a real estate buyer can legally compel a seller to abide by their original agreement and sell them the specific piece of property they owe them, even if the seller gets cold feet about selling the property.
In a contract for sale of real estate, the remedy of specific performance may be incorporated into the language of the contract. However, if it is not, the decision to award specific performance is at the discretion of the judge in the case. In order to properly award specific performance, the court must find that both parties are substantially able to perform their end of the contract.
Rescission is the return of the parties to the position that they had been in if the contract had been made. Essentially, when rescission is granted, the contract is treated as though it never existed in the first place.
If an error was made in the creation of a contract, the court may use its equitable power to modify the terms of the contract to reflect the true meaning of the language as the parties intended it.
For any questions about your contract or how to get justice for the other side’s breach, contact the Baltimore contracts attorneys at the Heyman Law Firm. For a case assessment today, call us at (410) 305-9287.
