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How businesses can address breaches of contract

Businesses in Louisiana may do everything they can to protect themselves by drawing up contracts and working to create clear agreements. On far too many occasions, however, other parties fail to follow through on an agreement, causing significant damages for the business. When creating a business contract, the agreement includes obligations for each of the parties involved. If one party fails to follow through on their pledge, this is known as a breach of contract.

Breaches can take different forms; in some cases, work may be delayed, sub-par in quality or never completed at all. Some breaches of contract can be significant or material while other breaches may be immaterial and not lead to monetary damages. After a breach, one or both parties to the agreement may seek to recover financially or have the original contract enforced. Informal negotiations may help both parties to arrive at an agreement outside the courtroom. However, commercial litigation could also emerge from a contract dispute.

If one party violates a contract's terms, the other party can seek relief, including damages, specific performance or cancellation and restitution. Compensatory damages are designed to compensate for the harms caused by a breach while punitive damages are intended to punish particularly harmful actions. Liquidated damages are specifically identified in the contract to be payable in case of a breach. Specific performance is a much less common resolution as it requires court-ordered performance of the contract's terms. In addition, the other party may seek to cancel a contract after a breach while pursuing restitution for lost funds.

Businesses may face contract disputes over a number of issues, from employment agreements to major purchases. A commercial law attorney can work with business owners to craft tightly drafted contracts and take action when a contract dispute arises.

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