When you enter into a contract, you do so with the belief that the other party is going to hold up their end of the agreement. When they fail to do so it is called a breach of contract, and the law offers a couple of different ways to make you whole. One is referred to as an equitable remedy, while the other is a legal remedy. While a legal remedy allows you to pursue financial compensation for whatever monetary damages you’ve suffered as a result of the breach, an equitable remedy is prescribed by the court, and is meant to resolve the problem where paying money to the wronged party doesn’t provide a real remedy.
When a contract is breached and an equitable remedy is required, there are generally three different approaches that can be taken. They are:
- Specific performance – In specific performance, the court orders the breaching party to fulfill the part of the contract that they have failed to perform. This may mean delivery of a product, provision of a service, or payment for a product or service.
- Contract rescission – Contract rescission is a term that means cancellation. It eliminates the original obligation for both parties to a contract. In some cases, a new contract will be written.
- Contract reformation – Contract reformation is a rewrite of the original contract that clarifies the terms of the original contract so that both parties can comply. In order for reformation to be ordered, the original contract must have been valid. Reformation is frequently used when there has been either a mistake or a misrepresentation of one of the parties’ abilities or intentions.
The determination of when an equitable remedy is appropriate and which equitable remedy will be applied is made by a judge, who bases their decision on the specifics of the given situation. The process is discretionary and often does not come into play unless it can be shown that monetary compensation is unavailable or inappropriate.
Frustration and helplessness are common emotions when you’ve been the victim of a breach of contract, but you are not without recourse. If a valid contract was in place then an experienced business attorney can guide you through the various courses of action available to you, including the possibility of seeking an equitable remedy. For more information on how we can help you navigate the process, contact our office today to set up an appointment.