When Monetary Compensation is Inadequate
In most instances, when a commercial contract has been breached, the non-breaching party seeks payment of monetary compensation to cover its losses. It may take the form of lost profits, out-of-pocket expenses, or lost opportunity costs. In some situations, though, the payment of cash by one party will be deemed inadequate or insufficient to cover the other party’s losses. In such situations, the court may grant the non-breaching party certain “equitable” remedies.
An order of specific performance requires the non-compliant party to perform as promised in the contract. Such a remedy will only be available if the non-breaching party can provide the court with sufficient evidence to show that the payment of money will not put the parties in the same place they would have been, had the contract not been breached. The classic case where specific performance is often ordered is with respect to the sale of real property. Because each parcel of property is deemed to be unique, the payment of damages will not allow the non-breaching party to purchase the same property elsewhere. In such a situation, the court may compel the sale of the property.
Reformation of the Contract
New Jersey law also allows a judge to essentially “rewrite” a contract (or a relevant section of a contract), so that it clearly and accurately states what the court has determined the parties originally agreed to. As a general rule, to successfully get a court to reform a contract, a party must show a mutual mistake of law or fact, or must show that the contract contains a typo or drafting error.
Rescission of a Contract
In appropriate circumstances, the court may also decide to essentially cancel the agreement, with both parties recovering any funds or goods already transferred. This remedy is generally not available with respect to a contract for services, unless no services have been performed.
Contact Attorney Howard N. Sobel
At the office of Howard N. Sobel, we provide comprehensive legal counsel to businesses and business owners. Contact our office online or call us at 856-424-6400 to set up a free initial consultation. Evening and weekend appointments can be arranged upon request. We accept all major credit cards.
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