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3 non-monetary solutions to commercial contract disputes

| Sep 23, 2020 | Business Law |

From securing service and supplier agreements to leasing or purchasing commercial property, legal contracts are vital to American business. In the U.S., the Uniform Commercial Code ensures that business owners can rely on consistent enforcement of contractual terms if a dispute arises.

When a breach of contract occurs, the non-breaching party may be able to receive monetary compensation through litigation. However, money alone may be inadequate to resolve the issue and protect the harmed party from further losses.

1. Contract reformation

Also known as “contract rectification”, the court may allow parties to rewrite a contract in part or in full if the original language does not reflect the true intentions of the agreement. This may occur when the initial contract contains a mistake or ambiguity, or if one party intentionally or unintentionally misled the other.

2. Contract recission

Under contract recission, the court may order parties to terminate the entire original contract. The goal of recission is to minimize the cost of mutual losses and, to the extent possible, restore parties to the same position they held before entering the agreement.

This may be preferable when parties want to avoid conflict over damages or future performance, or when one party has committed fraud, material misrepresentation, coercion or otherwise breached fiduciary duty.

3. Contract enforcement

In some cases, the subject of a contract may be unique or difficult to acquire from another source. Common examples include real estate transactions, specialized service or vendor agreements or the purchase of rare goods.

Under these circumstances, the court may order the party in breach of contract to fulfill the terms of the original agreement through a process known as specific performance enforcement, forcing the breaching party to render services or goods already paid for.