Suing for Breach of Contract

For a detailed discussion of suing in small claims court, go to Small Claims Court Basics at AllBusiness.com.

Suing in Civil Trial Court
If the amount of the damages you are demanding for the breach of contract exceeds the limited amount of a small claims court, you might consider suing in a more formal state court -- a trial court.

It is possible to represent yourself in a breach of contract action in state trial court without hiring an attorney. Nevertheless, state trial courts do not offer the informal procedure of small claims court, and you will have to learn and follow all of the complicated rules and procedures for bringing a lawsuit. And not only are the procedures more complicated, but it is also more expensive to pursue an action in civil trial court.

As with filing a claim in small claims court, it is possible that the mere filing of a lawsuit for breach of contract will induce or convince the breaching party to settle the dispute either by agreeing to pay some or all of the money you have demanded or by performing the contract.

Remedies for Breach of Contract A remedy is the rights given to a party by law or by contract that the party may exercise upon a default or breach by the other contracting party.

After you successfully sue for breach of contract, you will be entitled to some kind of relief under law. The main remedies available for a breach of contract action include the following:

• Damages. Damages are payment in one form or another paid by the breaching party to the non-breaching party. There are four basic types of damages: (1) compensatory damages, which serve to place the non-breaching party in the position the party would have been in if the breach had not occurred; (2) nominal damages, which constitute a token award of damages where there has been no actual money loss to the non-breaching party, or when the non-breaching party's performance was not without its own negative aspects; (3) liquidated damages, which are a specific amount of damages agreed to at the time the contract was first entered into; and (4) punitive damages (rarely given in contract actions), which are damages paid to the non-breaching party above and beyond what would make that party whole and also serve to punish the breaching party.

• Specific performance. If it is determined that damages are inadequate as a legal remedy to the non-breaching party, the equitable remedy of specific performance may be available. Specific performance is the compelling of the breaching party to do specifically what the party agreed to do under the contract. Specific performance may be used in a contract action only if the subject matter of the contract is rare or unique and damages would not be sufficient to place the non-breaching party in as good a position as if the breach had not occurred.
• Cancellation and restitution. If the non-breaching party has performed under the contract and given the breaching party any benefit under the contract, the non-breaching party may cancel the contract and sue for restitution. Restitution will put the non-breaching party back in the position he or she was in prior to the breach, and cancellation of the contract will void the contract and relieve all parties of any further obligations under the contract.

For more information, go to the Litigation section of the Legal Center at AllBusiness.com.