Nebraska Real Estate Continuing Education - NEBRASKA Approved School: RealEstateCE.com
NE 3.0 hours Contracts and Leasing Course Syllabus
3.0 Designated Subject Matter R
A breach of contract is when one or both of the parties fail to perform according to the terms and conditions of the contract. If there has been a material breach, then the other party may be able to take court action. There are four legal remedies for a breach of contract that include specific performance, liquidated damages, compensatory damages, and rescission.
Specific performance is a legal action where the court orders the party who breached the contract to perform according to the contract. Specific performance, as a remedy, may not always be possible.
Liquidated damages occur when both parties to a contract agree in advance to a dollar amount that will compensate the other party in the event of a breach. This amount must be outlined in writing. It makes it easier for the non-breaching party to recover these damages since they were agreed to in writing.
Compensatory damages are the most common remedy for a breach of contract, given that there was not a liquidated damages clause. This compensates the other party for the financial loss they incurred because of a breach of contract.
Rescission takes place when a contract has been canceled, and each party is returned to their original position. A rescission could result from the agreement of the parties or by court order.
Upon completion of this course, the real estate professional will have a better understanding of the consequences of a breach should one of the parties’ default on the contract. It is important to remember that some contracts specify the consequences of a breach when the contract is originally formed.