When a breach of contract section takes place, this means one of the parties who signed the contract did not fulfill or meet the terms and conditions of the agreement. There are many instances when a contract for a remedy should be provided, especially when a consumer is involved. This allows the consumer to make a purchase with peace of mind in knowing whatever it is that they are buying, there will be an offer to remedy the situation if the product or service does not meet their needs.

Statutory remedies are generally only available in certain situations. However, it is possible for parties to come together and agree on making remedies in other types of situations, but both parties have to agree.

When Can a Contract for Remedy Be Enforced?

One situation in which a contract for remedy may be enforced is when a person who owns a piece of property is allowed to enter the property to repossess collateral from a debtor.

As an example, consider a person who is renting storage units. The person renting the unit fails to make payments. In the contract he or she signed, it explicitly states that the owner has the right to enter the storage unit after 60 days of non-payment and take in his or her possession anything in the storage unit that belongs to the debtor. To do this, the storage unit owner has to prove there was a breach of contract section.

Contracts should be extensively detailed to protect both parties. For example, the storage unit owner should have it written in detail that he or she has the right to enter the storage unit to take possession of the items in the unit as a way to make up for the debt that wasn't paid. If this isn't written in the contract, then the storage unit owner may face legal consequences for taking the items.

It is always a good idea for the secured party to let the debtor know that a repossession of property is going to take place due to a breach of contract section. A beach of contract form can be used to alert the debtor of the situation. This helps to safeguard the interests of the secured party and will help mitigate any claims of trespassing. The secured party doesn't necessarily need permission to acquire the collateral, but it will look better in the eyes of the court if proper notice was given to the debtor. It will also look better if an alternative remedy was offered.

Various types of alternative remedies could include:

  • Letting the debtor pay their debt within a certain period of time,
  • Allowing the debtor to pay existing debt plus a fee,
  • Offering the debtor a discount if they will pay a portion of the debt owed.

What Happens to Left Over Money From Items Repossessed?

It's also a good idea for a contract to state what is going to happen to any money that is left over after the initial debt has been paid.

For example, a storage unit owner rents a unit to a person for $60 a month. After two months of non-payment, the debt equals $120. The unit owner obtains the possessions inside the unit and sells them for a total of $600, meaning there is $380 left over.

The contract states that $100 can be kept for miscellaneous purposes, meaning there is now a total of $280 left over. The contract also states that this leftover money can then be distributed to any other creditors that the debtor has debt with. In order to do this, though, it must be extensively outlined in the contract.

What Happens to Equitable Remedies?

Much of the time, any equitable remedies are going to be left at the court's discretion to determine what happens to them. A final judgment typically has to be entered to determine where the leftover money is going to be distributed. Courts are not bound to follow provisions stated in a contract, but they often side with these provisions when a reasonable remedy was offered to the debtor.

Are Contract Promises Independent or Dependent?

It's important to understand that according to modern contract law, those who take part in a contract and their promises to one another are not regarded as independent. This means that a breach of contract section does give the right to claim for damages, however, only when a material breach occurs does it excuse the non-breaching party from having to fulfill his or her promises.

If you need help with understanding what a breach of contract section is, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Stripe, and Twilio.