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What constitutes breach of contract and what happens afterwards?

No matter the reputation of a company and no matter how noble the intentions of a company, it is likely that at some point it will be involved in a contract dispute. Contract disputes often arise due to a breach of the contract. This occurs when provisions in the contract, which two parties agree to, aren't met. When those provisions or objectives aren't met, one party has "breached" the contract.

When a contract is breached, there are usually two routes that the parties take. One is that the party harmed by the breach of contract attempts to enforce the contract by taking legal action. The other route is to try informal methods to mediate and remedy the situation. Negotiations and discussions to fix the situation are certainly suggested, as it can be much more cost-effective than taking another company to court.

However, not every company is willing to work with other companies when a breach of contract hangs over the discussions. In these cases, legal action is necessary and the offended party needs to prepare itself for the lawsuit.

Damages and "specific performance" are often when the offended party seeks when filing a breach of contract lawsuit. If damages are involved, the party that violated the contract would have to pay the other company based on a number of factors, such as punitive and compensatory damages, nominal damages and liquidated damages. "Specific performance," on the other hand, is a court order that forces the breaching party to honor the contract.

Source: FindLaw, "Breach of Contract and Lawsuits," Accessed June 7, 2016

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