Question

Which of the following is a potential consequence of breaching a contract? Select all that apply.

a) Financial penalties
b) Lawsuits and legal action
c) Termination of the contract
d) Increased trust and cooperation with the other party

Answer 1

Option a, b and c are the correct answer. The potential consequences of breaching a contract include financial penalties, lawsuits and legal action, and termination of the contract.

Step-by-step explanation:

When a contract is breached, there are several potential consequences that can occur:

1. Financial penalties: This is a form of formal negative sanction where the breaching party may be required to pay a certain amount of money as compensation for the breach.
2. Lawsuits and legal action: Breaching a contract can lead to legal disputes, where the non-breaching party may file a lawsuit to seek damages or specific performance.
3. Termination of the contract: If one party breaches the contract, the other party may choose to terminate the contract altogether.

On the other hand, increased trust and cooperation with the other party is not a consequence of breaching a contract.