Consequences of Breach of Contract in General

When one of the parties fails to perform its contractual obligations, such party is in breach of contract and the other party has a right to demand the fulfillment of the agreement and to demand performance of those obligations with the help of the authorities. However, it is not always possible or even viable from the point of view of the damaged party to demand that the other party perform the original contract. It may be better to demand other consequences.

The consequences of a breach of contract vary and are dependent on which party is in breach of its obligations. Naturally, the seriousness of the breach also affects the consequences. The common consequence is reduction of the contract price, remedy of the defect, compensation for damage and interest for delay. It is only possible to rescind the contract when the breach is fundamental.

The parties may also agree on the consequences of the breach of agreement when making a contract or separately. It might be reasonable to agree on liquidated damages for delay for example. See more about the liquidated damages in paragraph [4.3.2.8 Liquidated damages].