Businesses affected by contractual breaches often need to pursue litigation to resolve this issue. Civil court judges have the authority to offer several kinds of relief to organizations negatively affected by breaches of contract. Awarding plaintiffs damages is a common outcome for breach of contract lawsuits. Judges who agree that a business has suffered economic harm due to another party’s failure to uphold a contract can provide financial relief by awarding the plaintiff damages.
There are a number of different types of damages that organizations can request in a breach of contract lawsuit, including the three outlined below.
Penalty fees included in the contract
In some jurisdictions, those harmed by contractual violations can request punitive or exemplary damages. Unfortunately, it is highly unlikely for a civil judge in Texas to award exemplary damages in a breach of contract scenario. The standard for such damages is too high for the typical contract breach to meet the necessary requirements.
That being said, it may still be possible to impose an economic penalty on the party that didn’t uphold the contract. If the original written agreement includes penalties such as specific fees that may accrue on a recurring basis, a judge can choose to enforce those clauses and award a company hundreds or even thousands of dollars based on penalty clauses.
Damages related to operational disruptions
Contract breaches may affect the normal operations of an otherwise successful company. For example, the failure to secure materials might lead to a factory idling certain production lines. It may have to pay workers for hours during which they do not perform their jobs.
The failure to finish a construction project by a specific deadline might mean that a business cannot reopen or begin serving customers as intended. The company may have daily costs accruing while it waits for the other party to fulfill the terms of the contract. Expenses related to operational disruptions can often comprise a significant portion of the damages awarded in a breach of contract lawsuit.
Damages for reputational damage
When a supplier or service provider fails to fulfill a contract, the other party to the agreement may end up defaulting on agreements made with other parties. Without materials to manufacture custom products, a business may have to delay or cancel the delivery of an order to a client.
The failure of a company to provide key services related to security or information technology might lead to breaches that end up affecting customers or clients. Those issues can cause reputation damage and may diminish the market share and earning potential of a previously successful organization.
There may be an assortment of other damages that an organization can recoup in a successful breach of contract lawsuit. Reviewing a contract and the impact that a breach has had – with the assistance of a skilled legal team – can help quantify the harm caused.