What is a breach of contract?

If you’ve ever signed a contract — like a catering contract for a kid’s birthday party, divorce settlement agreement, or kitchen renovation arrangement — you know how important it is. Because written contracts are legal documents, they are binding contracts that state the parties’  commitments — e.g., one provides a service and the other compensation.

When a party fails to perform their obligations under the terms of a contract — such as delivering a product outside of an agreed upon timeframe or failing to pay what was mutually arranged — that creates a breach of contract.

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Breach of contract resolutions

Parties can try to resolve breaches of contract themselves. But if they can’t agree on how to iron out the issue, they may go to court. If the amount of money at stake is quite small, the matter could be decided in small claims court. 

As some states prohibit attorneys from appearing in small claims courts, these cases are typically much more streamlined than larger cases. In fact, many small claims court rulings are decided on the same day the parties appear before the judge to argue the case.

Opposing parties can also hire a mediator or go to binding arbitration to lay out their claims in front of an independent, neutral party.

What is a typical breach of contract compensation?

So what can you expect to receive if you win your breach of contract case?

Unfortunately, there is no cut-and-dried answer. The available legal remedies are on a case-by-case basis, including the specific breach of contract type and the state in which you filed a claim. Types of damages include the following:

  1. Compensatory damages, the most common type of legal remedy, pay the non-breaching party direct damages.
  2. Attorney fees and court costs. In addition to compensatory damages, some judges order the defendant, or breaching party, to reimburse the plaintiff for the legal fees they incurred in bringing the case to court.
  3. Restitution occurs if the non-breaching party can prove their loss is directly due to the other party’s breach. For example, if a party signs a contract to paint a house, and the painter accidentally breaks a window, the court may order the painter to pay for the cost of the window.
  4. Specific performance requires the breaching party to perform what they agreed to do — for example to update a website.

Last, remember that contract law varies from state to state. Regardless, knowing what constitutes a breach of contract as well as potential remedies can help you when drafting your own contracts or reviewing agreements before signing.

How to use Jotform Sign to build, edit, and share your own contracts

With all the doom and gloom of contract breaches, it can be hard to remember that one of the easiest, most straightforward ways to minimize these violations is by having full control of all your online forms, reports, and contracts.

Tools like Jotform Sign, the e-signature solution that lets users build their own contracts, make this possible. Jotform Sign gives you access to 600-plus ready-made templates, allowing you to customize them with brand colors, logos, and fonts, and share them via link or by embedding them on your company website. You can even set up a unique access code on your e-contracts for an added layer of protection on an already highly secure platform.

Once your contracts have been sent for e-signature, Jotform Sign tracks the signature process — with a step-by-step audit trail of when parties sign and which still need to (so you can reach out to avoid a backlog). Jotform Sign is easy to use, fully customizable, and completely code free, helping users of all programming backgrounds build, sign, send, and store professional documents from one powerful platform.

While a breach of contract is never ideal, it does happen, so it’s important to understand how, why, and what you can do about it. Now, at least you know some things to consider.

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