Breach of Contract: What to Do When a Contract is Breached

Article 1170 of the Civil Code states that those guilty of fraud, delay, or negligence, in the performance of their obligations, or those who, in any way, contravene the tenor of their obligations can be held liable for damages.

In the case of Cathay Pacific Airways Ltd. v. Spouses Vazquez, G.R. No. 150843, breach of contract is the inability to fulfill the specifications of the contract without any legal reason. It can also be defined as the failure to perform any promise forming part or whole of the contract without legal excuse.

Those who are guilty of a breach of contract may not be imprisoned as it is a civil case, and not a crime. They can, however, be held liable for damages, as previously mentioned.

In the case of RCPI v. Verchez, the aggrieved party has a right of relief following the proof of existence of a contract and failure of the other party in complying with its terms.

The court will not set free the other party from liability of any sort, following nonperformance of contractual undertaking or contravening the tenor of it.

Remedies for the plaintiff

The plaintiff can file a case and ask for damages for any harm or injury that they may have sustained as a consequence of the breach in the other party’s contractual obligations.

In the case of RCPI v. Verchez, a breach of the contract gives the injured party a valid reason to recover whatever it is that may have been lost or suffered as a result. The remedy is meant to protect the interests of the promissee (the party to whom a promise has been made).

These interests include the promissee’s expectation interest, or their interest in having the benefit of their bargain by being placed in as ideal a position as they would have been in if the contract been performed to their satisfaction.

This may also include their reliance interest, which is their interest in getting reimbursed for any loss that may have been caused by their reliance on the contract by being placed in as ideal a position as they would have been in if the contract had not been made.

Lastly, this may include the promissee’s restitution interest, which is their interest in restoring to them any benefit that they granted the other party.

Agreements accomplish little for their makers or for society at large unless they are used as basis for action.

In the event of an infraction, it the defendant’s duty to compensate the injured party owing to their failure to observe their contractual obligation unless they can show proof of extenuating circumstances, or proof of their exercise of due diligence. The attendance of a fortuitous event also excuses them from any liability.

Fortuitous events refer to circumstances that go beyond human intervention, such as fires, earthquakes, floods, and similar natural calamities.

Remedies for the defendant

To escape liability, the defendant must show proof that they have exercised due diligence, or that their non-performance is due to a fortuitous event.

For more information on breach of contract and the available remedies, you can get in touch with Duran & Duran-Schulze here. The attorneys at Duran & Duran-Schulze can offer a free case evaluation.

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