A contract is a written agreement between two parties where each is expected to fulfill their end of the deal without breaching any set terms. If one party fails to respect the agreed obligations, the other has the right to pursue a legal solution and seek compensation equal to the damage caused by the breach.
There’s a number of methods in California to help satisfy the damaged party. One is a monetary compensation and there is also an option for the court to order the damaging party to fulfill their end of the bargain previously prescribed by the contract.
Claim for a breach of contract is a common practice in every business deal where, in the majority of cases, a contract is signed. DDWK Attorneys gave us more insight into how these claims are handled in practice.
How to measure damages by breach of contract
California Legislature and California Supreme Court both agree that damages are determined in such a way that the plaintiff is put in a position as if the breach had never existed, and that the contract had been fulfilled in its entirety.
California Civil Code Section 3300 asserts that the plaintiff should be compensated for the amount of money they lost due to a breach of contract or amount which would approximately accumulate had the contract been fully respected. The goal of the legal representatives is to put the plaintiff in a position in which they would approximately be as if the breach had never occurred.
Type of damages
There are two types of damages in California when it comes to a breach of contract: general and special damages.
General damages are considered foreseen by both parties when the contract was signed and their occurrence can be viewed as anticipated if it ever comes to a breach. A good example here is real estate leases. A contract is breached if a one-year lease if abruptly ended earlier when a tenant leaves and does not pay for the remaining amount which was agreed upon.
Damage caused to the landlord can be compensated by paying for the rest of the amount which was originally determined in the contract, or the amount missing until a new tenant signs a new contract with the landlord. There is also an option for liquidated damages which is a fixed amount predetermined in the contract in case any breach occurs. This is a penalty for breach and the Court can enforce these damages unless they are proven unreasonable.
Special damages are not foreseen in the contract, but they occur in some special circumstances. For example, special damages include expenses the plaintiff had to cover for expenses due to lack of agreed-upon performance in the contracts, or any other unforeseen expenses that came up due to the breach. In order to get a legal satisfaction, the defaulting party has to be aware of possible risks that might lead to a potential breach, before signing.
If the monetary reward does not suffice for the damage caused by the breach, a court may order a specific action to be performed. This would require the defendant to follow through the course of action they were obliged to by the contract.
Types of breaches
Breaches can be partial and total. Partial breaches are those in which only some of the obligations are completed, and a total means that none of the obligations are completed. There is also a material and immaterial breach. A material breach is when obligations are not fulfilled, either completely or partially, and when one party has a negative outcome because of that. Immaterial is when one party changes the agreed on clauses to cater to their needs more or for various other reasons. The other party does not necessarily have to be affected negatively by that.