When one party breaches a contract, the other party—the nonbreaching party—can choose one or more of several remedies. (Does changing terms of service on a social networking site constitute a breach of contract? See this chapter’s Insight into Social Media feature for a look at this issue.) A remedy is the relief provided for an innocent party when the other party has breached the contract. It is the means employed to enforce a right or to redress an injury.
QUESTION
Chapter Introduction
When one party breaches a contract, the other party—the nonbreaching party—can choose one or more of several remedies. (Does changing terms of service on a social networking site constitute a breach of contract? See this chapter’s Insight into Social Media feature for a look at this issue.) A remedy is the relief provided for an innocent party when the other party has breached the contract. It is the means employed to enforce a right or to redress an injury.
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When one party breaches a contract, the other party—the nonbreaching party—can choose one or more of several remedies. (Does changing terms of service on a social networking site constitute a breach of contract? See this chapter’s Insight into Social Media feature for a look at this issue.) A remedy is the relief provided for an innocent party when the other party has breached the contract. It is the means employed to enforce a right or to redress an injury.
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| Insight into Social Media
Was Instagram’s Revision of Its Terms of Service a Breach of Contract? In 2012, Facebook acquired the social networking site Instagram for $715 million. Instagram is a photo-sharing service that also allows users to add filters and effects to the photos. The Terms of Service Are a Contract When you use social media or other services on the Instagram Changes Its Terms of Service In 2013, to the consternation of a number of users, Instagram changed its terms of service to give it the right and ability to transfer and otherwise use user content on the site, apparently without compensation. The new terms also limited users’ ability to bring class-action lawsuits against Instagram, limited the damages they could recover to $100, and required arbitration of any disputes. Lucy Funes, an Instagram user in California, filed a class-action lawsuit on behalf of herself and other users, claiming breach of contract and breach of the covenant of good faith and fair dealing that a contract implies. Although Instagram subsequently modified the language that appeared to give it the right to use users’ photos without compensation, it retained other controversial terms, including the mandatory arbitration clause and a provision allowing it to place ads in conjunction with user content. Instagram Seeks Dismissal of the Lawsuit While Funes is contending that Instagram breached their contract by changing its terms of service, Instagram argues that Funes cannot claim breach of contract. The reason is that she—and other users—were given thirty days’ notice before the new terms of service took effect. Because Funes continued to use her account after that thirty-day period, Instagram maintains that, in effect, she agreed to the new terms. Behind the Change in Terms of Service In revising its terms of service, Instagram, or rather its new owner Facebook, was trying to monetize, or find a way to make revenue, from the many users of its site. A challenge for Facebook is how to translate its billions of users into profits. This challenge has become particularly acute for Facebook since its initial public offering in 2012. Now that it is a public company, Facebook must answer to its shareholders. Facebook has faced a number of class-action lawsuits, including an ongoing suit for $15 billion from users who claim that Facebook has been “improperly tracking the Internet use of its members even after they have logged out of their accounts.” As Facebook tries to increase its profits to please its shareholders, it is likely to face even more lawsuits from users who resent the company’s efforts to monetize the content on its site. Legal Critical ThinkingInsight Into The Ethical Environment Within Instagram’s current terms of service there is a statement, “We may not always identify paid services, sponsored content, or commercial communications as such.” Is it ethical for Instagram to act this way? Discuss.
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The most common remedies available to a nonbreaching party include damages, rescission and restitution, specific performance, and reformation. As discussed in Chapter 1, a distinction is made between remedies at law and remedies in equity. Today, the remedy at law normally is monetary damages, which are discussed in the first part of this chapter. Equitable remedies include rescission and restitution, specific performance, and reformation, all of which will be examined later in the chapter. Usually, a court will not award an equitable remedy unless the remedy at law is inadequate.
ANSWER
Remedies for Breach of Contract: A Comprehensive Overview
Introduction
When a party breaches a contract, the nonbreaching party is entitled to seek remedies to address the breach and mitigate any resulting harm. Remedies serve as a means to enforce rights and redress injuries suffered by the innocent party. This chapter aims to explore the various remedies available to nonbreaching parties in contract disputes. Additionally, it delves into the intriguing question of whether changing the terms of service on a social networking site, such as Instagram, constitutes a breach of contract.
Insight into Social Media
The acquisition of Instagram by Facebook in 2012 brought about significant changes, including revisions to Instagram’s terms of service. This alteration granted Instagram certain rights to use user content without compensation and imposed restrictions on users’ ability to file class-action lawsuits (Pasquinelli et al., 2021). A subsequent class-action lawsuit filed against Instagram claimed breach of contract and breach of the covenant of good faith and fair dealing. Instagram defended itself by asserting that users had been provided a 30-day notice period, implying their consent to the modified terms. This case raises intriguing questions regarding the enforceability of terms of service agreements and their potential classification as breaches of contract.
Legal Critical Thinking – Insight into the Ethical Environment
Within Instagram’s current terms of service, a statement reads, “We may not always identify paid services, sponsored content, or commercial communications as such.” This raises an ethical concern about Instagram’s practices (The Miniature Guide to Critical Thinking Concepts and Tools, n.d.). Is it ethically acceptable for Instagram to engage in this behavior? A thoughtful analysis of the ethical implications is warranted to shed light on the alignment between Instagram’s actions and ethical standards.
Remedies for Breach of Contract
To address a breach of contract, nonbreaching parties can pursue different remedies, categorized as remedies at law and remedies in equity. The most common remedy at law is monetary damages, which seeks to compensate the injured party for losses incurred due to the breach. This aspect will be thoroughly examined in the initial part of this chapter.
Equitable remedies, on the other hand, focus on achieving fairness and justice beyond mere monetary compensation (Legal Remedies for Breach of Contract on JSTOR, n.d.). They include rescission and restitution, specific performance, and reformation. Rescission and restitution aim to undo the contract and restore the parties to their pre-contractual positions. Specific performance compels the breaching party to fulfill their contractual obligations precisely as agreed upon. Reformation allows the court to modify or rewrite certain terms of the contract to reflect the original intent of the parties.
The availability of equitable remedies is subject to the adequacy of the legal remedy. Courts generally refrain from granting equitable remedies unless monetary damages prove insufficient in addressing the harm caused by the breach. This chapter will delve into these equitable remedies, their requirements, and the circumstances under which they may be granted.
Conclusion
In contract law, the nonbreaching party has several remedies at their disposal to address a breach of contract. This chapter has provided an introduction to the topic, explored the insight into social media concerning Instagram’s terms of service, and raised an ethical question regarding Instagram’s practices. Additionally, it has outlined the primary categories of remedies: remedies at law, centered on monetary damages, and equitable remedies encompassing rescission and restitution, specific performance, and reformation. By comprehensively examining these remedies, this chapter aims to provide a comprehensive understanding of the options available to nonbreaching parties in the pursuit of justice.
References
Legal Remedies for Breach of Contract on JSTOR. (n.d.). https://www.jstor.org/stable/1121184
Pasquinelli, C., Trunfio, M., Bellini, N., & Rossi, S. (2021). Sustainability in Overtouristified Cities? A Social Media Insight into Italian Branding Responses to Covid-19 Crisis. Sustainability, 13(4), 1848. https://doi.org/10.3390/su13041848
The Miniature Guide to Critical Thinking Concepts and Tools. (n.d.). Google Books. https://books.google.com/books?hl=en&lr=&id=Cm6pDwAAQBAJ&oi=fnd&pg=PA4&dq=Legal+Critical+Thinking+-+Insight+into+the+Ethical+Environment&ots=Yc8F7mFgWK&sig=2DLgc5moLrCRygaMdlxdX8e6RRo
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