What is a Contract?
A contract is basically an agreement between two or more people for mutually enforceable responsibilities. For instance, a contract is established when one person agrees to render a service or sell a product to another person, who agrees, in turn, to pay for that service or good. A breach of contract can, therefore, occur when a party does not perform his or her obligations according to the stated terms of the agreement, or does not perform his obligations on time, or does not perform at all.
Whenever a contract breach occurs, damages may be claimed for such breach by the non-breaching party. In the business world, breach of contracts can often be quite common since most business activities are based on contractual relationships.
Generally speaking, a breach of contract can either be “material” or “immaterial” within the context of a legal solution for such breach.
Elements of Breach of Contract
For you to prevail in a breach of contract case, you must be able to prove the following elements:
- The existence of a contract
- The evidence of the defendant’s breach of contract terms
- Performance by the plaintiff; and
- Damages as a result of the defendant’s breach of contract.
Means of Settling Breach of Contract
If you are facing a breach of contract lawsuit or believe an individual or entity has failed to honor his or her contractual obligations, a lot may be at stake. Therefore, one of the most important things you can do will be to consult with an experienced business attorney near you to discuss what options are available to you to seek redress.
Whenever a party breaches the terms of a contract, the non-breaching party can often try to get compensation for any harm that the breach might have caused, or they may request to have the terms of the contract fully implemented (specific performance.) Though there are informal ways you can use to resolve a contractual dispute, the most common process, however, is to institute is a lawsuit against the other party. The parties involved in the contract dispute may be allowed to resolve the issue in a small claims court if the amount involved is below a particular figure (usually between $3,000 and $7,500.)
However, as earlier stated, there are both formal and informal ways of resolving a breach of contract case. Lawsuits or litigation, therefore, are not the only available options for you to resolve a contract dispute.
For example, the various parties, or the provisions of the contract might permit the intervention of a mediator to settle any dispute that may arise, or they may agree to a binding or non-binding arbitration by an arbitrator. These are all out-of-court options and are often classified under the term of Alternative Dispute Resolution (ADR).
Resolution of a Contract Breach
In the case of a filed lawsuit as a means to settle the breach of a contract, or even if an ADR was sought, some of the available restitutions that may be given as a judgment against the defendant include:
- Payment of Damages
The payment of damages is often the most common remedy for a breach of contract. The payment of damages is aimed at financially compensating the non-breaching party for any damages they may have suffered as a result of the breach.
- Specific Performance
A “Specific Performance” may be sought after by the plaintiff if other remedies will be inadequate as compensation for the damage suffered. Specific performance is best described as a judgment against the defendant ordered by the court, instructing them to perform the specific duties as set out in the contract.
- Restitution and Cancellation
Alternatively, you may decide to cancel the contract as the non-breaching party and sue for restitution if you have given the breaching party a benefit. Restitution basically means that the plaintiff is required to give up any gains they may have obtained from the defendant, as a result of the contractual relationship.
Cancellation involves rendering the contract void and relieving all parties of any contractual obligations.
Disadvantages of Settling Quietly
Settling a case of contractual breach quietly or without resorting to litigation or other ADR methods several disadvantages such as;
- The breaching party would not be put on notice as to how serious you are about holding them accountable.
- The breaching party’s cooperation in finding a positive resolution to the breach would not be strong.
Why You Should Consider Filing a Lawsuit
Filing a lawsuit has its advantages, as well as its disadvantages, and each positive and negative should be weighed against each other.
As earlier stated, if you file a civil lawsuit against the other party, you may be entitled to monetary compensation for any damages you may have suffered from the breach. But on the flip side, the other party may have legally acceptable reasons for not complying with the terms of the contract, and at such you may lose the lawsuit, therefore ensuring that you have spent money in legal and other fees, and at the end of the day, you do not get compensated, therefore meaning you would have lost out twice.
The Time of Breach of Contract
Until the time for the performance of obligations, there is no breach of contract. Also, unless there are damages when the time of performance has arrived, there is nothing like action for breach of contract.
Threats of non-performance before the time of performance are due to lead to an entirely different legal concept called “anticipatory repudiation”.
If you are involved in a breach of contract lawsuit or you think an individual is not keeping up to his or her end of the bargain, it is advisable to seek an experienced business lawyer before you make any decision.
About the Author
Chris Deborow is a freelance writer who writes for various online blogs and publications. He has written this piece for Telligent Marketing LLC, a digital marketing company that offers SEO for lawyers and other firms in the legal industry.