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Contract Penalty Provisions and Clauses

Liquidated damage clauses in contracts are enforceable, while penalty clauses are not. Paragon Group, Inc. v. Ampleman, 878 S.W.2d 878, 880 (Mo. Ct. App. 1994). The reason for this is that the policy behind remedies in the event of a breach of contract is to effect compensation, not a penalty. Luna v. Smith, 861 S.W.2d […]

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Option Rights and Preemptive Rights in Contracts

Contracts can have option rights or preemptive rights. An option, in the context of real estate, usually gives a person a power to compel the owner of the property to sell it at a stipulated price whether or not he or she is willing to part with ownership. Anderson v. Parker, 351 S.W.3d 82, 831 […]

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Breach of Contract: Specific Performance Versus Damages

When a breach of contract occurs, the general rule is that, in certain cases, the remedy is either a suit for damages or a suit for specific performance of the contract. Magruder v. Pauley, 411 S.W.3d 323, 331 (Mo. Ct. App. 2013). The suit for damages would provide the non-breaching party with money, whereas the […]

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Breach of Contract Cures, Contract Termination

Contracts will often include “cure” provisions to prevent a party from immediately canceling or terminating a contract in the event of breach. Moreover, as is the case with more complex or lengthy contracts, a “cure” provision allows a party to correct an inadvertent breach of contract.  A cure clause usually states that the non-breaching party […]

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Substantial Performance, Contract Litigation

The traditional rule regarding contracts is that all parties must follow the terms of the contract or agreement precisely. In certain occasions, though, a party may “substantially perfrom” under a contract without being liable for breach of contract.  In the absence of an express provision in a contract requiring precise, literal compliance, substantial compliance of […]

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Special Damages versus General Damages

“Damages” refers to the amount of money a plaintiff may be entitled to as a result of some civil wrong committed by a defendant (e.g., breach of contract, breach of trust, trespass, personal injury, etc.). “General damages” are those that flow as a natural and necessary result of the act complained of, whereas “special damages” […]

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Unjust Enrichment Claims When a Contract Exists

To win on a claim for unjust enrichment, a plaintiff needs to demonstrate that (1) the defendant was enriched by the receipt of a benefit, (2) the enrichment was at the expense of the plaintiff and (3) that it would be unjust to allow the defendant to retain the benefit. Damon v. City of Kansas City, […]

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Arbitration Waivers

Aribtration clauses are becoming increasingly common as a way to more expeditiously resolve disputes that can arise between parties to a contract. With an arbitration, a neutral, third-party arbitrator decides the case, as opposed to a judge or a jury. Many disputes can arise with respect to the enforceability of an arbitration provision (e.g., unconscionability, […]

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Third-Party Beneficiary Contracts

While it may seem counter-intuitive and illogical, it is possible for a third-party to a contract (i.e., a non-signer) to sue one of the parties to the contract for breach of contract. A third party beneficiary to a contract is one who is not privy to a contract or its consideration but who may still […]

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Lost Profits, Income, Consequential Damages

Lost profits, income or revenue often form a major component of a plaintiff’s damages in business disputes, contract disputes and employment disputes. Loss of profits generally means the amount of money a plaintiff would have realized but for the Defendant’s conduct. Meridian Enters. Corp. v. KCBS, Inc., 910 S.W.2d 329, 331 (Mo. Ct. App. 1995). For […]

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