Equitable remedies are a particular set of remedies that can be issued by a court during a breach of contract case. In general, remedies are typically divided into two categories: legal remedies and equitable remedies. Legal remedies are those that allow the non-breaching party to recover compensatory (i.e., money) damages.
On the other hand, equitable remedies are actions that a court must prescribe. They are often used in order to help resolve a substantial breach or contract dispute when money damages would be considered insufficient to resolve the issue or protect the parties from harm.
Also, equitable remedies are usually not available as an option until the parties can show the court that legal damages will not be enough to resolve their contract issue.
What Equitable Remedies are Available for a Breach of Contract Dispute?
Equitable remedies are usually provided by the court in the event of a material breach of contract claim. In general, there are three primary equitable remedies that parties typically receive from a court. These include the following equitable remedies:
- Contract Reformation: The equitable remedy of contract reformation means that the court will instruct the parties to rewrite their original contract in a way that will reflect the true intentions of each party more accurately. The main factor that must be present in order to be granted this remedy is that it requires the parties to initially have had a valid, working contract in existence already; otherwise, there will be no contract for the parties to rewrite.
- In addition, contract reformation is often prescribed in cases where there was either a mistake or misrepresentation in a portion of the contract terms. Also, unlike contract rescission, a contract can be reformed in whole or in part. Hence why it is sometimes referred to as contract “rectification.”
- Specific Performance: Specific performance is essentially a decree or court order that requires the party in breach to fully perform their part of the contract according to the terms laid out in the parties’ agreement. For example, this might include requiring the breaching party to deliver goods which have already been previously paid for, or to render payment to another party for their services.
- Contract Rescission: Contract rescission is when the court orders the parties to terminate or cancel their entire contract. The main goal of contract rescission is to put the parties in the same position that they were in before they entered the contract. This helps to reduce the cost of damages done to both parties. It also releases both parties from having to perform their side of the agreement.
The parties may also ask the court to issue an injunction against a party who breached the contract. An injunction is a court order that forces a party to either take a specific action or refrain from taking a particular action.
For instance, while a court will usually not order a party to finish a job, they can issue an injunction that prevents that party from seeking employment at companies that are considered competitors of their original employer.
A court may also issue an injunction when a seller refuses to sell a buyer their home at a closing (e.g., after all the proper steps are taken and the buyer has paid). Alternatively, they may force a buyer to pay the seller for the home in accordance with the terms of their contract.
Finally, the circumstances of the breach will usually dictate which equitable remedy the court will agree to enforce. This is because courts have a lot of discretion when addressing an issue that calls for equitable relief. The court will consider several different factors before they issue their ruling, such as the prior business dealings of the parties or the respective bargaining power of each party.
Can I Obtain Both Legal and Equitable Remedies?
As previously mentioned, it is typically required that a party seeks legal remedies (e.g., a compensatory or monetary damage award) before the court will even consider granting equitable relief. In other words, if the parties cannot show that money will not fix their contract dispute, then they will most likely not be eligible for any of the equitable remedies listed above.
On the other hand, there are certain situations where a party to a contract may be able to receive monetary compensation under the rules of equity. These are known as “restitutionary damages”, which are an extremely specific and very limited type of damage in a breach of contract case.
The purpose of restitutionary damages is basically to prevent one party from being unjustly enriched for their breach. For example, if the non-breaching party has already delivered their goods, but the other party has not yet paid for them, then a judge may order the breaching party to pay restitutionary damages to stop them from receiving an agreed upon benefit for free and at the expense of the other party.
Do I Need to Hire a Lawyer for Help with Breach of Contract Remedies?
Equitable remedies are often tailored to the individual contract and circumstances of the parties. Therefore, it would be in your best to work with a local business attorney if you are facing an issue involving a breach of contract.
An experienced business attorney will be able to review the facts of your case and from there can determine whether or not an equitable remedy is available or necessary for your situation.
Additionally, you may also want to contact an attorney to help you draft your initial contract, so that disputes or errors can be avoided from the start.