Breach of Contract Remedies: What You Can Recover and How
Material vs Minor Breach
Material breach: Goes to the heart of the contract. One party didn't get what they bargained for. The non-breaching party can stop performance and sue for damages. Minor (immaterial) breach: Performance was mostly delivered but with small deviations. The non-breaching party must still perform but can sue for the difference in value. Example: a website delivered 2 days late (minor) vs a website never delivered (material).
5 Types of Remedies
1. Compensatory damages: Puts you in the position you would have been in if the contract was performed. Lost profits + costs incurred. This is the most common remedy. 2. Restitution: Returns the benefit the breaching party received. "Give back what you took." Used when the contract is rescinded. 3. Specific performance: Court orders the breaching party to actually perform. Rare — usually only for unique items (real estate, art). Not available if money can adequately compensate. 4. Liquidated damages: Pre-agreed dollar amount in the contract. Must be a reasonable estimate of actual damages at the time of signing — not a penalty. Courts strike down punitive liquidated damages. 5. Nominal damages: Token amount (often $1) when a breach occurred but no actual loss.
The Duty to Mitigate
You cannot sit back and let damages pile up. If a contractor walks off the job, you must make reasonable efforts to find a replacement at a fair price. You can recover the difference — but not the full cost of doing nothing. Courts consistently reduce awards when the non-breaching party failed to mitigate.
What You Cannot Recover
- Punitive damages: Almost never available in contract cases (unlike tort). Contracts are about compensation, not punishment.
- Emotional distress: Not recoverable in contract claims. This is a tort remedy.
- Attorney fees: Unless the contract specifically says "prevailing party recovers reasonable attorney fees." This clause is worth its weight in gold.
- Speculative lost profits: Must be proven with reasonable certainty. "We would have made millions" without evidence will be dismissed.
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