Rights of Parties to a Contract: Everything You Need to Know
Rights of parties to a contract are the rights that are guaranteed through a legally valid contract to the parties that have made the agreement.3 min read
2. What Happens if a Contract Has Been Breached?
Rights of parties to a contract are the rights that are guaranteed through a legally valid contract to the parties that have made the agreement. Such rights can be written; for example, the exclusive rights to copyrighted content. Rights can also be implied; for example, each party has a right to a fair and transparent disclosure of the contract material itself.
Contract rights exist on each side of the contract, but will most likely look different depending on the content of the contract. Each agreement will naturally involve a different set of rights than another agreement. One party might have the right to purchase a service, while the other party might have the right to provide a service to that party. Contract rights are related to (but different than) contract duties, which are the obligations to perform that each party has under the terms of the agreement.
What Are Some Examples of Contract Rights?
The most fundamental contract right is that of having the other party deal fairly and with good faith in the contract. It is inferred in every contract, and is called the "good faith and fair dealing" requirement. It requires that both parties maintain a reasonable effort to work honestly with the other party and provide honesty and disclosure of matters pertaining to the agreement.
Most often, contract rights involve business matters, such as the exchange of products, services, and compensation. However, other kinds of subject matter may also be involved.
Typical kinds of contract rights include:
- The right to buy a specific service or product.
- The right to sell a service or product.
- The right to transfer ownership rights.
- The right to be the exclusive purchaser or seller.
- The right to exclusive ownership or use of a brand, product, or material.
- The right to timely and full monetary payment.
- The right to repairs, refunds, or exchanges.
- The right to file a lawsuit over a contract breach or dispute.
- Other rights related to the particular intentions of each party.
What Happens if a Contract Has Been Breached?
If a party does not fulfill its obligations under the agreement, it is said to have breached the contract (or to be in breach of the contract). The injured party (plaintiff) may sue to recover damages caused by the breach of contract. In general, courts refer to standard principles when they determine the type of damages for which the defendant may be liable.
Primarily, courts tend to require that damages be monetary in nature, as opposed to forcing a party to perform in a particular way or to follow through with its agreement obligations. In addition, court-ordered relief is meant to compensate the agreement, restoring the injured party to the position they would have been in if the breach of contract had not happened and the agreement had been satisfied.
In other words, contract law is meant to give relief to the injured party, not to punish the party responsible for the breach. In general, punitive damages are not recoverable by the injured party in an agreement dispute.
Occasionally, the plaintiff can prove that a breach of contract has occurred, but is unable to prove specific damages with an adequate level of certainty. In these instances, a court may require a nominal monetary damage amount (such as one dollar) as recognition of the negative consequences resulting from the breach.
There are three simple categories in which contract damages typically belong:
- Expectation damages - This type of damages is intended to help restore the injured party to where they would be if the breach had not occurred.
- Reliance damages - This type of damages can result if a breach of contract left the injured party in a worse position than they would have been in had the breach not occurred.
- Restitution damages - This type of damages occurs when a party has received a benefit which may be returned or compensated upon breach of contract.
In specific and limited cases, the court may call for "specific performance," which means the breaching party is required to fulfill its agreement obligations. Typically, this kind of solution is only possible when there is a unique item involved (such as real estate), or when monetary damages would be indefinable.
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