Monday, June 23, 2014

A Micro Cap Companies Remedies for Breach of Contract Lawsuits

As we wrote before, a valid contract for a micro-cap company can be the difference between a profitable quarter and a quarterly loss.  If the case becomes that you must take another party to court for a "breach" of contract, there are remedies that the court will implement to make the non-breaching party whole again.  These remedies for breach of contract include:
  1. Specific Performance
  2. Damages
  3. UCC Remedies
  4. Avoidable Damages
  5. Restitution
In the above five remedies, the courts weigh what kind of contract, how the parties acted, whether it is a service or good at issue and many other factors in deciding which remedy to grant.  

The remedy of Specific Performance is never granted in services contracts.  Specific Performance makes the breaching party perform as if he or she did not breach.  In other words, the courts orders a Specific Performance, usually the sale of a good already promised to the buyer.  The Specific Performance of "services" amounts to involuntary servitude and thus the courts never grant this remedy for services. 

The remedy of Damages consist of (1) compensatory damages and (2) liquidated damages.  

Compensatory damages include expectation damages (benefit of the bargain).  Expectation damages generally put the parties in as good as a position as if the parties had performed the contract.  Compensatory damages also include consequential damages, which are only available if they where foreseeable.  Consequential damages are damages suffered as a consequence of the breach such as storing expenses, shipping expenses etc.

Liquidated damages are those stated in the contract in the case of a breach.  Liquidated damages will be granted by the court if (1) they were difficult to calculate at the time the contract was formed (2) they are a reasonable forecast of the damages likely to occur and (3) they are NOT punitive.  

The UCC Remedies govern the sale of goods.  For the seller they include (1) commercially reasonable resale damages (2) market price damages (3) profit and (4) action for price.  For the buyer they include (1) cover damages (2) market price damages (3) specific performance and (4) breach of warranty.

The last two remedies are "Avoidable Damages" - "Duty to Mitigate" and "Restitution".

Avoidable Damages or Avoidable consequences doctrine is a legal principle that places the responsibility of minimizing damages upon the person who has been injured. The plaintiff after an injury or breach of contract should make reasonable efforts to mitigate the effects of the injury or breach.

Restitution is usually awarded where one party has provided a benefit to the other party and it is awarded to repay the party providing the benefit the reasonable value of the benefit he gave. Typically, restitution is awarded in situations where one party has provided a benefit to another party under a contract and that contract turns out to be unenforceable.

A micro cap company should be aware of these Legal Remedies and take advantage of situations where contracts are in place and they are not at fault for the breach.

The MicroCapCompany Team
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About the Author: Nicholas Coriano is a Business Consultant and Planning Guru.  He is a graduate of The University of Connecticut Business School and the John Marshall Law School in Chicago.  He has worked at Merrill Lynch, The New York Stock Exchange and as an Investor Relations Agent & Consultant to Micro Cap Companies and Penny Stocks.  He is the founder and author of The a blog focused on providing information and advice to Micro Cap Company Executives and Investors.  You can also find him blogging about Social Media, SEO, Web Development and Tech on

About MicroCapCompany.COM: MicroCapCompany.COM (The Blog) is a blog focused on providing articles, news and information on the micro cap sector and start-ups.  The Blog is a free service offered by Cervitude™ Investor Relations (a micro cap investor relations firm) and offers compensated research reports and business plan writing services for micro cap companies and penny stocks.  If there is a particular topic you would like to see covered on The Blog, email, If you would like to advertise on The Blog, click here

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