The only way a party to a contract may be forced to perform would be under the law of equity. Under the law of equity a party may seek what’s called “specific performance”. In that the court orders the non-performing party to perform. If they fail to perform they would be in contempt of court. Courts are extremely reluctant to issue orders for specific performance and the general requirement for specific performance is the party seeking the specific performance order must prove the performance is unique and could only be provided by that party. If another party could perform the work or sell the product or service, a court will not order specific performance. Where this leaves the party who wants, but is not getting performance, is they will have any remedies they reserved under the agreement for non-performance and they will rights for breach of the agreement by the other party.
There may be a number of reasons why a party to a contract may not be performing. One may be the contract wasn’t structured properly, where it allowed the supplier or contractor to commence the work and then abandon the work while they perform work for other customers. They may intend to return and complete the work. At the other end of the scale you can have companies that are deliberately not proceeding with the work simply because it will cost them more to complete the work than what they are owed. If you encountered the latter, you need to review the agreement to determine what remedies you may have and whether you may claim anticipatory breach.
Anticipatory breach of a contract can occur from statements the party made, or by that party’s actions. There would not be an anticipatory breach if the party merely suspended the work and would still be able to complete the work on time. If there was anticipatory breach you could pursue termination for cause and damages you sustain. What you would recover would be based upon the types and amount of damage the agreement allows you to recover.
If the agreement had liquidated damages, you would be able to claim that, but that would be all you could claim. If you didn’t have a liquidated damages provision, your recovery would be based upon the actual damages you sustain and the types of damages the contract allows you to recover. Damages may be direct, incidental, consequential, and may include lost profits. For example, if you needed to hire a party to have the non-performing party’s equipment removed and stored off site, that’s a damage you sustained.
What types of remedies might you have? If you want remedies other than those that you have at law or in equity, those remedies need to be reserved in the agreement. For example, if you were dealing with a prime contractor and they breached the agreement, you could potentially have as remedies that the prime must assign all subcontracts to you so you can use the existing subcontractors to complete the work. You could include the right to keep and use any of their equipment on site until the work is completed. Why would a contractor agree to that? The simple fact is since they will be liable for damages as a result of their breach, allowing those things would mitigate the amount of damages you could claim. It could also cost them more in the end if they didn’t.
