Table of Contents
What Is a Breach of Contract?
Contracts are agreements in which multiple parties, often individuals or businesses, agree to do something in exchange for something else. For example, an employment contract outlines an employee’s duties/job, and remuneration or rates of pay for his or her job. A breach of contract is the act of breaking the terms of the contract. Breach of contract cases vary as widely as does the purpose of the contract. These are the different types of contract breaches:
- Minor Breach: This doesn’t constitute a full breach of contract, but can still lead to a lawsuit. It happens when the essential terms of the contract are performed, but maybe a small condition was not performed as expected.
- Material Breach: This is more substantial, and more likely to result in a lawsuit. In a material breach, one or more of the essential conditions of the contract were unfulfilled.
- Fundamental Breach: This occurs when a major factor of the contract was unfulfilled.
- Anticipatory Breach: Most contracts have a due date or a final date for which the terms of the contract will be fulfilled. An anticipatory breach occurs when a party to the contract commits a breach before the contract end date. This is still considered a breach of contract and valid grounds for a lawsuit.
Any one of these circumstances can constitute a breach of contract and lead to a lawsuit. No matter what side of the deal you’re on, it’s a good idea to get all contracts in writing with signatures from each party involved. An oral contract can be very difficult to prove in court.
A breach of contract case is one of the most common lawsuits. Wrongful termination lawsuits, for example, often fall under the umbrella of a breach of contract — providing a breach of the employment agreement. If you’re in a situation where you had a contract or agreement that was broken or unfulfilled by the other party, you might consider filing a breach of contract case.
What You Need to Establish Your Breach of Contract Case
Proof of the Contract
The most important thing in establishing your breach of contract case is proving that you had an agreed contract in the first place. A written contract will be the easiest to prove. Otherwise, emails, letters, receipts, even a copy of the check if you wrote one can help prove the contract.
In a situation with an oral contract where little documentation is available, witnesses will be your greatest asset. You will also make your own testimony that the contract was established.
As an employer, this is both a benefit and a risk of having all employees sign employment contracts: it provides a written document of the terms of employment. If you abide by those terms, you should be safe from employee lawsuits. If, however, an employee is able to prove that you violated the employment agreement, the evidence will work against you and your business.
Damages Resulting From Breach of Contract
Proving that the contract was broken and that damages resulted will be your next hurdle. You will need any possible evidence to prove that the other party failed to meet the terms of your contract, including proof of damages as a result of the breach. Unlike a personal injury lawsuit, damages in a breach of contract case are usually material, rather than medical. For example, money and time ost because the contract was broken. Whenever possible, provide receipts showing any financial losses you suffered.
Filing a Breach of Contract Lawsuit
A breach of contract lawsuit is a civil matter, so the lawsuit procedure will fall into the civil system. First, you’ll want to contact an attorney and see about hiring them on a contingency fee, which means the attorney only gets paid if you win the case.
Your lawsuit begins with a complaint filed to the court detailing all allegations of wrongdoing. The court will decide if your complaint is accepted and can continue onto a lawsuit. Your lawyer will be able to guide you through filing the complaint. It is important to note that in many cases, contracts — especially employment contracts — will carry an arbitration agreement, also known as a forced arbitration clause. This clause precludes any opportunity to bring suit, and is generally used specifically to avoid litigation related to any perceived breach of contract.
Who Pays the Attorneys Fees?
In most breach cases, the losing party is not required to pay the attorney fees of the winning party. However, the winning party may sometimes include their attorney fees among their list of damages resulting from the breach of contract.
If the contract in question specifically stated that attorney fees would be covered in the case of a lawsuit, then your attorney fees could be included in your list of awarded remedies. Some states also require that attorney fees be covered by the losing party. You may have the prove that the attorney fees listed are reasonable.
What Remedies Get Awarded in Breach of Contract Cases?
There are several types of damages awarded, or remedies, as a result of breach of contract cases:
- Compensatory Damages: Most commonly, courts will order compensatory damages, or a monetary remedy so you are able to pay for the resulted damages, or the product or service that wasn’t fulfilled.
- Restitution: Courts can also order the breaching party to pay back the amount they were paid in the initial contract.
- Punitive Damages: A court might order punitive damages to punish the breaching party if the case was considered a fundamental breach.
- Specific Performance: The court can also force the breaching party to fulfill the terms of the contract.
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