Contract Remedies FAQ

Specific performance is an equitable remedy in California that compels the breaching party to fulfill their exact contractual obligations rather than pay monetary damages. Under California Civil Code Sections 3384-3395, specific performance is available when monetary damages would be inadequate to compensate the injured party.

This remedy is most commonly granted in:

• Real estate transactions - Each parcel of land is considered unique, and damages cannot replicate the loss of a specific property
• Unique goods - Items that cannot be easily replaced in the marketplace
• Long-term supply contracts - Where market alternatives are unavailable

California courts will award specific performance when the contract terms are sufficiently definite to be enforced, the plaintiff has substantially performed their obligations or is ready and able to perform, and the remedy would not cause undue hardship to the defendant. Specific performance is generally not available for personal service contracts because forcing someone to work would raise involuntary servitude concerns.

Rescission is an equitable remedy that cancels a contract and returns the parties to their pre-contractual positions, as if the agreement never existed. California Civil Code Sections 1688-1693 govern rescission, which may be sought when a contract is voidable due to:

• Fraud or intentional misrepresentation
• Mutual or unilateral mistake
• Duress or undue influence
• Lack of capacity
• Failure of consideration

Unlike termination for breach, which ends the contract going forward, rescission operates retroactively to unwind the entire transaction. To obtain rescission, the party seeking it must act promptly upon discovering the grounds for rescission, offer to restore everything of value received under the contract, and not have ratified the contract after learning of the defect.

California Civil Code Section 1691 requires that the rescinding party give notice to the other party and restore any benefits received. Courts may order rescission with restitution, requiring each party to return what they received.

Restitution in California contract law is a remedy that prevents unjust enrichment by requiring the breaching party to return any benefits they received under the contract. Unlike compensatory damages that focus on the injured party's losses, restitution focuses on the breaching party's gains.

California Civil Code Section 1692 provides that upon rescission, the parties must restore to each other everything of value received under the contract. Restitution may be awarded in several contexts:

• When a contract is rescinded, the value of benefits conferred must be returned
• When a contract is unenforceable due to the statute of frauds but one party has performed
• When the non-breaching party elects restitution instead of expectation damages
• Under quasi-contract when no valid contract exists but one party was enriched

The measure of restitution is typically the reasonable value of the benefit conferred, which may be calculated as the market value of services rendered, the cost of materials provided, or the extent of the enrichment to the defendant. California courts may award restitution even when no valid contract exists, under the doctrine of unjust enrichment.

An injunction is a court order requiring a party to do something (mandatory injunction) or refrain from doing something (prohibitory injunction) in relation to a breach of contract. California Code of Civil Procedure Sections 525-534 govern injunctive relief.

To obtain an injunction, the plaintiff must demonstrate:

• A likelihood of success on the merits of the underlying breach claim
• That they will suffer irreparable harm without the injunction
• That the balance of hardships favors the plaintiff
• That the injunction serves the public interest

Injunctions are commonly sought in breach of contract cases involving non-compete agreements, confidentiality provisions, non-solicitation clauses, and exclusive dealing arrangements. California courts require that monetary damages be inadequate before granting injunctive relief.

Important: California Business and Professions Code Section 16600 severely restricts enforcement of non-compete agreements, affecting the availability of injunctive relief in employment contexts. A temporary restraining order may be obtained on an emergency basis, followed by a preliminary injunction hearing.

Reformation is an equitable remedy that allows a California court to modify a written contract to reflect the parties' true intentions when the written document fails to accurately express their agreement. California Civil Code Sections 3399-3402 authorize reformation in specific circumstances.

Reformation may be granted when there is:

• Mutual mistake - Both parties intended one thing but the writing says another
• Unilateral mistake plus fraud - One party was mistaken and the other knew and exploited it
• Scrivener's error - The person drafting the document made a clerical mistake

To obtain reformation, the plaintiff must prove the original agreement with clear and convincing evidence, demonstrate that the writing does not accurately reflect that agreement, and show the specific terms that should be included. Reformation is commonly sought when contracts contain scrivener's errors, ambiguous property boundary descriptions, or mathematical errors in pricing terms.

California courts will not reform a contract to include terms the parties never actually agreed upon or to save a party from a bad bargain they knowingly made.

Yes, California law permits the non-breaching party to cancel a contract after a material breach by the other party. Under California Civil Code Sections 1511 and 1514, when one party commits a material breach that goes to the essence of the contract, the other party is discharged from their obligations and may treat the contract as terminated.

However, the right to cancel is not automatic and must be exercised properly:

• Provide clear notice of termination, specifying the breach and intent to cancel
• The breach must defeat the essential purpose of the contract
• Consider whether the breaching party substantially performed
• Evaluate the likelihood of cure

California courts consider several factors in determining whether cancellation is appropriate: the relative harm to each party, whether the breaching party acted in good faith, and the proportion of performance completed.

Warning: If the breach is minor rather than material, the non-breaching party cannot cancel but must continue performance and seek damages for the deficiency. Wrongful cancellation—treating a minor breach as material—may itself constitute a breach, exposing the canceling party to liability.

California courts offer several equitable remedies for breach of contract when monetary damages would be inadequate:

• Specific Performance - Compels the breaching party to perform their exact contractual obligations (Civil Code Sections 3384-3395)
• Rescission - Unwinds the contract and returns parties to their pre-contractual positions (Civil Code Sections 1688-1693)
• Reformation - Corrects written contracts to reflect the parties' true intentions (Civil Code Sections 3399-3402)
• Injunctive Relief - Orders a party to do or refrain from doing something (CCP Sections 525-534)
• Constructive Trust - Imposes a trust on property wrongfully acquired through breach
• Accounting - Requires detailed financial disclosure when fiduciary duties were involved

Equitable remedies are discretionary, and courts may deny them if the plaintiff has unclean hands (engaged in wrongdoing related to the transaction), unreasonably delayed seeking relief (laches), or if enforcement would cause undue hardship to the defendant. Courts balance the interests of both parties and consider whether equity favors intervention beyond monetary compensation.

After obtaining a judgment for breach of contract in California, the judgment creditor must take affirmative steps to collect the award, as courts do not automatically collect on behalf of prevailing parties. California Code of Civil Procedure Sections 680-724 govern judgment enforcement.

Common enforcement methods include:

• Wage Garnishment - Seize up to 25% of the debtor's disposable earnings
• Bank Levies - Seize funds in the debtor's bank accounts
• Property Liens - Recorded against real estate, satisfied upon sale
• Till Tap Levies - For business debtors, collect cash from daily operations
• Asset Seizure - Personal property, vehicles, business equipment

The judgment creditor must first obtain a writ of execution from the court clerk, then instruct the county sheriff or a registered process server to levy on the debtor's assets. Judgment debtors can be compelled to appear for a debtor's examination under CCP Section 708.110 to disclose their assets under oath. California judgments are enforceable for ten years and may be renewed for additional ten-year periods. Interest accrues at the statutory rate of 10% per year.

Declaratory relief is a judicial determination of the rights, duties, and obligations of parties under a contract before a breach has occurred or when the nature of the breach is disputed. California Code of Civil Procedure Section 1060 authorizes courts to declare rights and duties under written instruments and contracts, resolving legal uncertainties without requiring the parties to breach and face liability.

Declaratory relief is particularly valuable when:

• Parties disagree about contract interpretation
• Circumstances have changed and performance obligations are unclear
• One party threatens to breach but has not yet done so
• Insurance coverage disputes arise over policy language
• Contract termination rights are contested

To obtain declaratory relief, there must be an actual controversy between parties with adverse legal interests—courts will not issue advisory opinions on hypothetical situations. The court's declaration has the force of a final judgment and determines the parties' rights going forward. California courts have broad discretion to grant or deny declaratory relief based on the circumstances, and it may be combined with other remedies such as specific performance.

When a judgment debtor cannot pay damages awarded for breach of contract, the judgment creditor faces the challenge of collecting from limited assets. California law provides several options but cannot create assets where none exist.

Steps to pursue collection:

• Asset Discovery - Conduct debtor's examinations under CCP Section 708.110 where the debtor must disclose assets under oath
• Payment Plans - Court-supervised installment agreements if debtor has some income
• Property Liens - Record judgment as a lien ensuring payment when property sells
• Business Assets - Pursue accounts receivable or interests in other entities
• Wait for Improvement - Judgment remains enforceable for 10 years, renewable indefinitely

Some assets are exempt from collection under CCP Sections 703-704, including necessary household items, tools of the trade, and portions of retirement accounts. If the debtor files bankruptcy, the breach of contract judgment may be dischargeable, potentially eliminating the obligation entirely. Before pursuing litigation, carefully consider whether the defendant has collectible assets—winning a judgment against an uncollectible debtor yields only a paper victory.