Yes, it can. Yes, an agreement can require arbitration or mediation. Courts are typically going to enforce these contractual clauses for a multitude of reasons. One, if you’ve agreed to something, the court prefers to stick to the terms of the contract as best as they can. Two, it cuts down on the court’s time, and they are busy, so if it means somebody is not going to have to utilize the court system and judicial resources, that means another case on the docket can be heard instead. Most significantly in determining whether a contract can legally require arbitration will be what state’s laws are being applied in interpreting the contract. The applicable state’s laws and statutes require of the parties contracting what language will create an enforceable arbitration or mediation clause in their contract. Typically, it needs to be spelled out in a specific typeface or separated in the agreement. The idea here is that if you’re going to give up the ability to file a lawsuit, that needs to stand out and be evident in the contract, so the party recognizes it and understands it.
What Type Of Damages Could I Recover From The Other Party If They Breach The Contract?
There are quite a few remedies that can be sought when a contract is breached. These remedies are going to turn on the type of contract, transaction, or agreement you have. The most typical is going to be compensatory or, in other words, money damages. Sometimes these are referred to as actual damages. There are two types of compensatory damages – general damages and special damages. General damages are covering a party’s direct loss when another party’s breach has harmed them. A good example might be you contracted with a party to provide them with certain services, and that party agreed they would pay you X amount of dollars for those services. You performed your part of the contract, and now that party is refusing to pay you. The money that you owed would be your general damages.
Special damages, or sometimes as they’re referred to consequential damages, are not typically predictable but still a result of the breach of contract. Another way of understanding this concept, is that these damages are indirect harm caused by the breaching party. Typically to recover special damages, the breaching party needed to be aware of the unique circumstances when the contract was entered into. A good example here might be a product needing to be delivered by a specific date to the purchasing party for that purchasing party’s business to complete other things within their business model or structure. It wouldn’t be fair to the breaching party if they were unaware of this to penalize them or make them pay damages.
Another area of remedy for breach of contract is specific performance. Specific performance is when a party can be required to perform their duties under a contract. You are most likely going to see the application of this in real estate law or contracts.. Real property is considered unique, and each piece of land and property is deemed to be original. Therefore, if a party tries not to sell or buy that piece of land for some reason, a court can step in and rule on the unique situation. There is the opposite effect in labor contracts because of constitutional concerns and the fact that you cannot force someone to provide labor. If a party is contracted to provide labor and refuses to do so, you cannot get specific performance because the law cannot force someone to do labor.
But, what you might have is as an injunction against that party. This comes up in the entertainment industry a lot. If an actor or actress might be considered a unique talent and you’ve hired that specific person and they refuse to fulfill their obligations pursuant to the contract, the court can’t put them in handcuffs and make them come to the set to perform. But what one can do, is file for an injunction. If the breaching party was trying to provide their services somewhere else, a court can enjoin and prohibit that from happening until you figured another way to settle the matter.
Another remedy to breach of contract is rescission. This is essentially just canceling a contract. It terminates both parties’ contractual duties. It is similar to the legal idea of reformation, where a court can change the contract’s substance to correct or alter the agreement when one party is suffering from the contract itself. However, it’s important to note that courts typically do not like to interfere with mistakes that could have been avoided by pre-investigation before entering into a contract. I think the good rule of thumb here is if you could have discovered something by doing your due diligence when agreeing to the contract, the court is not necessarily going to step in to save you from your own lack of due diligence and/or mistake.
Another property issue that can cause a party to seek a remedy arises when there is a zoning issue. For example, if you were to purchase a piece of property and wanted to start a certain business that it wasn’t zoned for Or maybe you would needed some type of government approval. You bought that property thinking you could use it for a commercial purpose but never actually looked into whether it was an acceptable use of the property, only to discover after the contract that it was not, and then wanted to cancel or undo the contract. The court will not step in and can’t correct the contract because you didn’t look into any zoning issues or land issues.
Restitution is another remedy in contract law. Restitution puts the parties back where they were or, more importantly, the injured party back to their prior position before the contract, as if it never happened. A good point here is if you are going after restitution damages, you can typically not recover lost profits or earnings under this method of recovery only because you are going back to your original position.
What If One Party To A Contract Knows Of A Fact That Has A Critical Bearing On The Transaction But Fails To Disclose The Fact To The Other Party?
Depending on the particular facts and circumstances the unaware party could seek multiple remedies. They could attempt to seek monetary damages if they were in fact harmed by entering into the contract unaware of the critical facts. The unaware party could possibly argue that the other party has mispresented and/or fraudulently induced the party into the contract by not disclosing certain facts and have the contract rescinded, cancelled, amended, or altered depending on what harm they have or will have suffered and what is necessary to correct it.
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