What to do when money won’t compensate you for the other party’s breach of your contract

Most of the time when someone breaches a contract, the remedy for the aggrieved party is money.

Rocklin Real Estate Attorney blog post imageFor example, if a tenant doesn’t pay her rent, the landlord will sue for the unpaid rents. If a buyer refuses to pay for the product he received, the seller will sue for money. But what can be done if money simply won’t compensate for the problems caused by someone’s breach of a contract? For example, I just wrapped up a case

where my client bought a bar. Part of the purchase included the seller’s liquor license (of course!). The seller was obligated under the sales agreement to file paperwork with the State agency that regulates liquor licenses to transfer the license to my client. At first, the seller filed the necessary paperwork to transfer the license. However, while the transfer was pending, the seller withdrew the application to transfer the license. He then tried to extort extra money in exchange for finishing the transfer of the license. This posed a huge problem.

My client could sue for breach of contract.

But the real issue was getting that liquor license. Without it, my client couldn’t run his bar. He would have to shut the doors until the lawsuit was wrapped up. That wasn’t a good option.

In a situation like this – where money won’t remedy the problem – the answer can be to seek an immediate injunction from the court ordering the defendant to honor the contract. In this case, ordering the seller to re-submit the liquor license transfer application. This can be sought very quickly – within days if necessary. But, beware that there’s a high hurdle to get the injunction.

To prevail, the plaintiff must prove (1) a probability of success on the merits, and (2) the possibility of irreparable harm if the injunction does not issue. So, in my example, we had to prove that we were very likely to win the lawsuit for breach of contract. That was pretty easy. The contract was very clear and detailed, and the seller plainly breached the contract when he withdrew the liquor license transfer application. In addition, we had to show that suing for monetary damages wouldn’t suffice. For us, we showed the court that it is almost impossible to obtain a liquor license from the State directly; instead, liquor licenses are obtained almost exclusively nowadays by buying one from a restaurant or bar that’s closing or by buying the bar itself. So, we showed the court that, without the license from the seller, my client would lose the entire value of the bar.

We won the injunction.

It took thorough legal briefing and solid evidence. But, in the right cases, and with good evidence, courts will compel someone to honor their contract or refrain from doing something that harms someone else.