Remedies for breaches of business contracts in California

When a business contract is broken, it can lead to serious financial and legal consequences. In California, the law offers several remedies to help the non-breaching party recover losses or enforce the terms of the agreement.

Below are the most common remedies for business contract breaches. 

Monetary damages

The most common remedy is monetary damages. This includes compensatory damages, which aim to cover the actual losses caused by the breach. In some cases, the court may also award consequential damages for indirect losses, as long as they were foreseeable. If the contract includes a liquidated damages clause, that amount may be enforced if it is reasonable.

Specific performance

When money isn’t enough to resolve the issue, the court may order specific performance. This means the breaching party must carry out their end of the contract. Specific performance is usually reserved for unique goods or services, such as real estate transactions, where substitutes are not easily found.

Rescission and restitution

If the contract is no longer workable, the parties may seek rescission. This cancels the contract and releases both sides from future obligations. The court may also award restitution, which restores the non-breaching party to the position they were in before the contract was made. This is common when one party has already provided a benefit and wants compensation for it.

To avoid disputes, business owners should have clear written contracts that outline expectations and include clauses for potential breaches. 

If your business is dealing with a breach of contract, seeking legal guidance can help you assess your options and find the most suitable remedy.