You have recently signed an agreement in the form of a memorandum of understanding with your business partner. The signing of the deal was characterized by much pomp and ceremony.
At last, the deal is signed.
You do not doubt in your mind that the fruits of the agreement will soon trickle down to your table. You have good reasons to be optimistic since, throughout the process, your partner demonstrated great enthusiasm, goodwill, and an unqualified commitment to pursue the deal to its logical course.
The unexpected happens.
Just a few months down the line, you discover that your partner is in clear breach of particular clauses of the MOU. What is more, the party is brazenly unapologetic.
Why, they reiterate, this was only an MOU! They never really intended to follow through.
What options do you have for a conclusive redress and compensation for such a breach of contract or MOU?
Seek the Help of a Contract Attorney
It is essential, first, to understand what is meant by the term “breach of contract.” Put simply, breach of contract is primarily a legal term that is used to describe a situation in which one party violates an agreement or a contract.
This might be the case when one of the parties does not fulfil the obligations arising from the provisions of an agreement or a contract. At times, this may involve an interference with the other party’s ability to fulfill their duties and responsibilities as outlined in the agreement.
Generally, a breach of contract may occur in whole or in part. Most contractual disputes are usually taken to court as a result of issues related to a breach of contract. In as far as the breach of memorandums of understanding go, there are several lines of action that you can opt for to ensure the other party is made answerable for their actions or inaction.
Logically, the first hurdle involves presenting sufficient proof to a court of law to demonstrate that the breach of MOU actually amounts to a breach of contract, in the full sense of the term.
It is good to seek the help of an experienced contract attorney. Indeed, keep in mind that only a lawyer can determine that you have a strong case in your hands. Only a lawyer can decide whether there are any merits to the claim that will make it stand in court. Further, only a lawyer can help sort the details of the planned case to ensure you have a watertight defense.
Demand for Monetary and Punitive Damages
Once you prove to a court of law that the breach of the memorandum of understanding by the other party actually constitutes a breach of contract, you can go ahead and ask the court to declare the party wholly responsible for the situation. This is referred to as a remedy. One of the most common remedies for a breach of contract usually involves monetary compensation.
In such a case, the offending party may be compelled by a court of law to pay a specified sum of money as a remedy for damages caused by the breach of the MOU. Of course, the amount of money in question depends on the nature and scope of the agreement signed by the parties as well as the specified consequences for a breach.
Keep in mind that the damages will be commensurate to the amount of money that the court considers to be reasonable compensation to the innocent party for any loss suffered. To ensure that the court will order a maximum punishment to the offender, you can make an application that states that the breach of MOU was particularly intentional or egregious.
If the court agrees with this application, it can order that the offending party should pay what is referred to as punitive damages. In this case, a judge might order that the offender must pay a specified sum of money in addition to the original fine.
The punitive penalty is usually considered as extra damages resulting from a deliberate, willful action to violate a legal agreement. Moreover, this is considered a legally justified form of pre-emptive punishment to deter those who would be tempted to do the same in the future.
Apply for a Restrictive Legal Injunction
An injunction is generally described as an order made by a court of law requiring the other party to refrain from engaging in activities that cause damage to the complainant.
In this case, you may ask the court to issue such an order, having proved beyond reasonable doubt that the action of the offender, linked to the breach of the memorandum of understanding, is causing considerable harm to your interests.
In most cases, once this is clear, the judge will not hesitate to issue an injunction. Such an order has the effect of stopping the offender from proceeding with any harmful actions resulting from the breach of the MOU.
Seek a Cancellation or Rescission Order
You can apply to a court of law to order the cancellation or suspension of the signed memorandum of understanding on the premise that the other party has already breached some crucial articles of the agreement. This kind of order is referred to as a rescission.
Having favorably considered your argument, a court may issue such orders on the logic that the complainant has suffered irreparable damage from the breach of the MOU. For this reason, the complaining party may be allowed to either rescind, cancel or terminate the original deal.
Ask for Amendment of Terms
You may also ask the court to impose alternative remedies with regards to the articles of the original memorandum of understanding. For instance, if you perceive that the other party in some ways forced, tricked, or coerced you into signing the MOU, you might table the evidence with the goal of convincing the court to amend the terms of the agreement to favor you. This may be done even if the MOU is not canceled immediately. Overall, this can result in instant relief and grant you some time allowance as you determine the way forward with regards to the breached MOU.
Apply for Implementation of Specific MOU Clauses
Moreover, if the memorandum of understanding was a result of genuine consent, you will have a compelling case in your hands. You can use the evidence to demonstrate to the court that the parties engaged in the MOU freely and that there was no fraud or undue influence to thrust anyone at a disadvantage.
Further, you should table the evidence, proving that the MOU was not ridden with mistakes and that the parties signed the deal with the full knowledge and intention that the agreement would carry legal force.
In this way, you will, likely, convince the court that the offending party is legally accountable for their conduct with regards to the agreement. In this situation, they must carry the consequences for breaching the MOU.
Demand an Order for Specific Performance of the MOU
If you signed a memorandum of understanding with an insurance agency, for instance, the party would be under obligation to comply with the terms of the policy. If it failed to do this, it would be a direct breach of the agreement.
You must keep in mind that such an insurance policy imposes a specific set of obligations on both parties. You must adhere to the terms of the agreement in the full sense of the deal. The insurers, on their part, are fully obligated to pay for the elements covered under the agreement.
In case the insurer reneges on such duty, this might constitute a breach of contract. In these circumstances, you have some reasonable legal grounds to sue the offending party for a breach of contract.
You may, therefore, ask the court to issue an order for specific performance of the contract. This order compels the party to honor their end of the bargain. Otherwise, they would have to deal with the consequences of breaching an MOU.
If you have sufficient reasons to believe that your memorandum of understanding with a second or third party has been breached, you have a battle in your hands; a huge legal tussle. It is incumbent upon you to prepare well for this battle.
You first need to be sure that the legal elements are perfectly in order. Don’t rush to court with a half-baked case that cannot withstand the sure firepower on the way. Be sure that the other party is really in breach of specific clauses of the MOU. Prepare a watertight case, backed with watertight evidence.
As noted, you have several options to place before a court of law with regards to the possible remedies to the breach of an MOU. Clear up everything with the help of an experienced legal mind. Ultimately, settle for any of the options outlined above to get the appropriate remedy for a breach of the MOU.