What is an injunction in contract law?

An injunction in contract law refers to a court order that restrains or prohibits a party from engaging in certain actions. It is primarily used to prevent potential harm or to maintain the status quo while a legal matter is being resolved. This means that if a party is likely to act in a way that could violate the rights of another party to the contract, the court can issue an injunction to stop that party from pursuing those actions.

This legal remedy ensures that the interests of the non-breaching party are protected during the legal process. For example, if a party threatens to breach a contract by taking actions that would lead to its violation, the affected party may seek an injunction to prevent such actions from occurring.

The other choices focus on different aspects of contract law. While performance enforcement is related to ensuring a party fulfills their contractual obligations, this is distinct from the prohibitive nature of an injunction. Compensation for losses refers to monetary damages resulting from a breach of contract, and a declaration of breach pertains to formally stating that a violation has occurred, which does not involve the preventive aspect that an injunction provides.