Mass Black Judge

The controversial truth is that a contract is only as strong as your willingness to spend a small fortune in court to prove you were right. It is a bitter pill to swallow. Truly. People sign these agreements thinking they have a “shield,” but when the other guy stops showing up, you realize you’re just holding a very expensive napkin. I’ve seen it a thousand times in my career.

There’s many people who think the law works like a vending machine where you put in a “breach” and out pops a “solution.” It doesn’t. You have to fight for it. Between you and I, the legal system is built for stamina, not speed.

When the work stops…

The material breach. This is the big one. If the other party fails to perform a core part of the deal—like a builder refusing to put the roof on—you have a right to stop your own payments. It’s a standoff.

Actually, let me—wait, I should probably explain the difference between a minor and a material breach first. A minor breach might be using the wrong brand of screws; a material breach is not showing up at all. If the breach is material, the actual reality of the situation is that you might be excused from the rest of your obligations. Gosh! It’s a high-stakes game of chicken.

Claiming the actual…

Expectation damages. This is the most common remedy in the world of construction and business. The court wants to put you in the position you would have been in if the contract had been followed. It’s about the money.

(Aside: I once had a client try to claim “emotional distress” damages because their kitchen cabinets were the wrong shade of eggshell, which, while annoying, is not exactly a legal trauma.) Anyway, back to the point. You usually get the “cost of cure.” This is the amount it costs to hire someone else to fix the mess the first guy left behind. The current status as it stands now is that you must prove these costs are reasonable. You can’t just hire the most expensive firm in town and expect the loser to pay for it.

If the money isn’t…

Specific performance. Sometimes, money just doesn’t cut it. If you were buying a specific piece of land or a one-of-a-kind piece of machinery, a judge can order the other party to actually finish the deal. It’s rare.

Courts hate micromanaging. They don’t want to oversee a contractor for six months to make sure he’s nailing things in straight. Specific performance is usually reserved for things that are “unique.” If the work can be done by someone else for a price, the court will almost always just tell you to go get the money instead. Argh! It’s frustrating when you just want the original guy to do what he promised.

The clauses for…

Liquidated damages. I always tell my clients to put these in the contract at the start. These are pre-set amounts of money—say, $250 a day—that the other party has to pay if they are late. It’s a deterrent.

• Clear deadlines for milestones.
• Specific daily penalties for delays.
• Notice requirements before the penalty kicks in.
• Caps on the total amount of damages.

If you don’t have this, you have to prove every cent of your loss in court, which is a massive headache. Liquidated damages make the process much smoother. It’s the “easy button” for a breach, provided the amount is reasonable and not just a “penalty” to punish the other guy.

Cleaning up the…

Rescission and restitution. Sometimes the relationship is so toxic that you just want to pretend it never happened. Rescission “undoes” the contract and puts everyone back where they started. It’s a reset.

Restitution is the part where they give you back your deposit, materials, and any equipment you paid for. It’s about preventing “unjust enrichment.” You shouldn’t be out of pocket for a project that never even got off the ground. It sounds simple, but getting that cash back is often like pulling teeth.

Taking the final…

Mitigating your losses. This is a big one that people always forget. The law says you have a duty to “mitigate.” This means you can’t just sit there and let the rain ruin your house because the builder left the roof off. You have to try to minimize the damage.

The court will reward you for being a victim and doing nothing to help yourself.

If you don’t try to find a replacement or cover the exposed beams with a tarp, a judge will subtract those avoidable losses from your payout. You have to be proactive. It’s a lot of work when you’re already stressed, but it’s the only way to protect your claim. Don’t let the situation get out of hand.

The history of the project will be picked apart by lawyers later, so keep every text, email and receipt. Evidence is the only thing that matters when the dust settles. You’ve got this. Just stay organized.

Handwritten-style note: Make sure you send a formal “Notice of Default” via certified mail before you file a lawsuit—most contracts require this as a first step!