What Is Contractual Remedies

Contractual Remedies: Understanding The Basics

In any business agreement, there are a set of terms and conditions that govern the relationship between the parties involved. When one party fails to meet their obligations under the contract, it can lead to financial or other losses for the other party. This is where contractual remedies come in.

Contractual remedies refer to the legal methods available to parties in a contract to seek compensation or enforce specific terms of the agreement. They can take many forms, including damages, specific performance, and injunctions. In this article, we`ll explore the basics of contractual remedies and what they mean for your business.

Types Of Contractual Remedies

Damages: This is the most common type of contractual remedy, and it refers to the monetary compensation awarded to the injured party for the other party`s breach of contract. It can be either liquidated damages (a predetermined amount agreed upon in the contract) or unliquidated damages (a sum of money awarded by the court based on the actual losses suffered).

Specific Performance: Sometimes, monetary compensation is not enough to remedy a breach of contract. In such cases, the court may order the breaching party to fulfill their obligations under the agreement. This is known as specific performance.

Injunctions: An injunction is a court order that prohibits or compels certain actions to be taken. In the context of a contract, an injunction may be sought to prevent the other party from breaching the agreement or to compel them to perform certain obligations.

Mitigation: When a party suffers losses due to a breach of contract, they have a duty to mitigate those losses by taking reasonable steps to minimize the harm caused. If they fail to do so, it may reduce the amount of damages awarded.

Limitations On Contractual Remedies

While contractual remedies can provide a means of seeking compensation for a breach of contract, there are certain limitations to their use. For example:

– Parties may limit the types of contractual remedies available in their agreement.

– Excessive damages or penalties may be deemed unenforceable by the courts.

– The injured party may have to meet certain conditions before seeking certain remedies (such as giving notice of the breach or attempting to negotiate a resolution).


Contractual remedies are important tools in managing business agreements. Understanding the different types of remedies available and their limitations can help you protect your interests and seek appropriate compensation if a breach of contract occurs. If you`re unsure about your contractual rights and remedies, it`s always best to seek legal advice.