What Happens if You Are Found in Breach of Contract?

In an ideal contract situation, both parties would uphold their side of the agreement, both sides would obtain what was agreed upon, and no issues would come up. However, it can be difficult to maintain a contract, even when both parties want to. Unexpected situations can present themselves without warning, and disputes could arise causing delays. This could sometimes lead to a breach of contract.

A breach of contract happens when a party of a legal binding agreement does not honor their side of the contract, either by not performing an action outlined in the contract, whether it is not performed on time, not performed in accordance with the agreement, or not performed at all. There are three distinct ways a party can breach a contract, depending on the agreement’s subject matter:

• Either partially or fully not performing the obligations set forth in the contract. This is known as an actual breach of contract.
• Behaving in a way that shows intent to not perform the obligations set forth in the contract. This is otherwise known as a renunciatory or anticipatory breach.
• Acting in a way that makes the obligations defined in the contract impossible to perform. This can also be known as a renunciatory breach.

Breaching a contract can have serious consequences. When a breach of contract occurs, the breaching party must pay damages to the aggrieved party. It typically can have significant financial consequences, such as:

• Lost income
• Lost profits
• Increased rental costs
• Lost rental income
• Increased labor costs
• Increase material costs

The nature of the breach typically determines how to remedy the breach. A minor breach, whereas the contract itself is not entirely violated and can still be performed in a certain manner, can often be remedied quickly because a minor breach is when one party fails to perform a small detail of the agreement. The contract typically allows a party a certain amount of time to fix the mistake.

A material breach, also known as a fundamental breach, is such an egregious error that it cancels the contract, and the nonbreaching party no longer must uphold their end of the contract and has the right to file a lawsuit. The contract will typically have the options to remedy the breach, either through mediation or arbitration before filing a lawsuit.

Pennsylvania law allows for damages to be recovered when a contract is breached, but it must total a sum that compensates the aggrieved party for their losses. The nonbreaching party must present evidence, however, that the damages they incurred were reasonably foreseeable at the time the contract was entered and reasonably certain in terms of calculations:

• Reasonably foreseeable: The damages recovered for the nonbreaching party must be a direct result of the contract breach and reasonably foreseeable at the time the parties agreed in the contract.
• Reasonably certain calculations: The nonbreaching party has the burden of proving the calculations of their damages by a fair degree of probability. It does not have to be exact, and the jury is forbidden to speculate the amounts. The amount should put the nonbreaching party in or as nearly in the same position they would have been if the contract had not been breached. If the damages cannot be calculated with certainty, then the nonbreaching party is entitled to damages made during or in anticipation of the performance of the contract.

Philadelphia Employment Lawyers at Sidkoff, Pincus & Green P.C. Help Parties Who Face Contractual Difficulties

If you believe you are in breach of contract, or are facing contractual difficulties, then contact the knowledgeable Philadelphia employment lawyers at Sidkoff, Pincus & Green P.C. immediately. Call us today at 215-574-0600 or fill out our online form to schedule an initial consultation. With our offices located in Philadelphia, we proudly serve all clients of South Jersey, Pennsylvania, and New Jersey.