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Breach of Contract
A contract creates certain obligations that are to be fulfilled by the people or companies who entered into the agreement. However, this does not always occur.

The law recognizes a breach of contract when a party fails to perform their obligations under a contract, fails to do so on time, or does not fully perform in accordance with the contract.

When a party breaches a contract, the other party may wish to have the contract enforced, or recover for any financial harm caused by the alleged breach. At this point, the non-breaching party has different options available: small claims court (if the amount in controversy is under the jurisdictional limit); resolution of the conflict through an alternative dispute resolution (ADR) process such as arbitration or mediation; or litigation.

Alternative Dispute Resolution (ADR)
An alternative to litigation, ADR is another way to resolve a dispute. Many times ADR is less formal, faster, and cheaper than a trial, which is why many judges will encourage parties to use ADR prior to giving the parties a trial date. ADR gives the parties ways to settle their dispute outside of the courtroom through the use of negotiation, arbitration and/or mediation.

Arbitration is a process through which a neutral third-party can judge your case. Generally, it is cheaper and less formal than trial. Mediation is an informal process facilitated by a neutral mediator who hears both sides of a dispute and then talks the parties toward resolution through mutual compromise.

Remedies for a Breach of Contract
When contract is breached, the non-breaching party is entitled to relief or a remedy under the law. Generally, remedies for breach of contract are: damages; specific performance; or cancellation and restitution.

Damages
Damages are the most common remedy for breach of contract. Damages involve the breaching party to pay the non-breaching party. Damages can be: compensatory (aimed to compensate the aggrieved party); punitive (aimed at punishing the breaching party for a wrongful act); nominal (token damages awarded on principal when no money was lost but a breach was proven); and liquidated (damages specified by the parties in the contract itself, in the event that the contract is breached). Most damages awarded in business contract disputes are compensatory.

Specific Performance
If damages are inadequate as a legal remedy, the aggrieved party may seek specific performance, a court-order requiring the party to perform under the contract.

Cancellation and Restitution
The non-breaching party may cancel the contract, voiding the contract and relieving all parties from any future obligation under the contract. The aggrieved party may also sue for restitution (to be put back in the position that they were prior to the breach).


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FAQ's
Q: What is an offer?
A: An offer is the first step to forming a contract. An offer is any action that creates a reasonable expectation that the offering party is willing to be bound by the proposed terms.

Q: When can you withdraw an offer?
A: As long as no consideration has been paid to hold an offer open, the offering party can withdraw or retract the offer at any time before acceptance.

Q: How is an offer accepted?
A: A party can accept an offer through a clear manifestation by the accepting party to be bound by to the offer. Generally, the acceptance must be communicated to the offering party in the manner proposed by that party.

Q: At what age can someone enter into a contract?
A: In most jurisdictions you must be the age of majority. However, an exception is made if a minor is entering into an agreement for necessities (i.e. food, shelter, clothing, etc.). A contract made by a person under the age of majority is voidable at the will of the minor, or their guardian, as long as the minor remains under the age of majority.

Q: Does a contract have to be in writing?
A: It depends on the subject-matter and length of duration of the contract. Many contracts do not have to be in writing. However, in California some contracts must be in writing pursuant to the Statute of Frauds. According to the Statute of Frauds, the following contracts must be in writing to be enforceable: (1) promises related to interests in land, (2) promises to pay the debt of another, (3) a promise that cannot be performed within a year, (4) contracts creating a joint tenancy, (5) a promise for the sale of goods of $500 or more, and (6) an agreement to arbitrate disputes.

Q: What is a breach of contract?
A: A breach of contract occurs when one party to the contract does not do what they are supposed to under the contract and does not have a legal excuse.

Q: How are damages calculated for a breach of a contract?
A: Damages depend on the breached agreement. If no monetary damages occur as a result of the breach, then the non-breaching party may only be able to claim nominal damages. Where monetary damages can be proven, the non-breaching party is generally entitled to compensatory damages. Compensatory damages, by definition, put the non-breaching party in the position that they would have been but for the breach.

Q: What is specific performance?
A: Specific performance is an equitable remedy requiring a person who has breached a contract to carry out their obligations under the contract. Generally specific performance is only available if the subject of the breached contract is rare and monetary damages would be inadequate compensation.
Resources
Findlaw Corporate Counsel Center, Business Contracts
Provides business contacts and forms by industry.

The UCC or Uniform Commercial Code
The legal code that sets out the rights and obligations of buyers and sellers engaging in commercial transactions. The UCC has been adopted by all states except Louisiana.

U.S. Department of Commerce
This is the department that administers International Trade Law and regulates U.S. exporting.

U.S. Small Business Administration
This Federal agency advises small businesses and provides guidance with respect to small business financing and development.