A contract is a document that records an agreement between two private parties. This creates mutual legal obligations and provides certain legal rights. A contract can be either oral or written; however, oral contracts are more challenging to enforce, and as such should be avoided.
A breach of contract occurs when a party to a valid contract fails to fulfill their side of the agreement. The specific terms contained within a contract instructs the parties regarding what they must do, and how they must do it, in order to maintain their promise. If a party does not do what the contract instructs that they do, the non-breaching party may take legal action and file a lawsuit against them in court.
Breaches can be either partial or complete. In order to determine what type of damages should be paid, the court will also assess whether the breach was substantial or minor.
There are three main ways in which a person may breach a contract. This includes when:
Some other ways that a contract can be breached include:
Individual state laws and the type of contract may determine other ways that a contract could be breached. An example of this would be how a lease agreement, sales contract, and government contract would all have different ways in which they may be breached.
Although the plaintiff in a breach of contract case must specify the damages they are seeking in their complaint, it is up to the court to decide what type of damages, if any, that the plaintiff should receive. There are several factors that the court takes into consideration when making this determination.
Generally speaking, the most common remedy for a breach of contract case is a monetary damages award. Monetary damages are also known as legal damages, and can be defined as the amount of money awarded to the injured and prevailing party in a lawsuit. These damages are typically paid out by the party who caused the injuries, and may be issued as a penalty, restitution, or both.
Some examples of monetary damages and other legal remedies include:
Compensatory damages are the most popular form of legal remedy requested in breach of contract cases. They are meant to compensate the non-breaching party for any financial losses suffered as a result of the breached contract. Compensatory damages are used to make the non-breaching party whole again, and can include such things as costs for loss of future earnings, costs of hiring new parties to complete the contract, etc.
The term “compensatory damages” covers general damages and specific damages. General damages commonly cover losses that are directly related to the subject matter of the contract, such as failing to meet a set number of shipments. Specific damages, on the other hand, compensate the plaintiff for losses related to the breach, but not resulting directly from the breach. An example of this would be damage to a business’ reputation.
In most breach of contract lawsuits, the plaintiff must specifically state that they are requesting compensatory damages when they file the claim. This is especially true for special damages, as those involve losses that are not addressed in the terms of the contract. If the plaintiff fails to request compensatory damages, they may be ineligible for monetary damages.
Some additional requirements for proving compensatory damages include:
To prove each of these requirements, the non-breaching party may need to provide additional evidence in support of their claims. An example of this would be how the victim of the breach may need to provide evidence that they and the defendant engaged in discussion, regarding the risks involved with their contract. The plaintiff may submit transcripts or records of negotiations providing evidence that the parties discussed potential losses.
There are certain circumstances in which compensatory damages will not be available. State statutes could limit the amount of compensation that a plaintiff may receive in a breach of contract claim. Further, the parties may waive their rights to compensatory damages in a provision contained within the contract.
If compensatory damages are unavailable, there may be other available remedies. It may be possible to request for certain equitable remedies, such as an injunction ordering the defendant to perform their contractual duties. As previously mentioned, most states require the plaintiff to choose whether they will be requesting monetary damages or equitable remedies at the beginning of the trial. It is important to note that it is usually not possible for a plaintiff to claim both types of remedies.
If you are involved in any sort of issue involving a breach of contract, you should consult with an area contract lawyers . An experienced and local business attorney will be best suited to understanding your state’s specific laws regarding contracts, and how those laws will affect your legal options. An attorney can also represent you in court, as needed, while helping you work towards an appropriate remedy, such as compensatory damages.