Breach of Contract FAQs
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A Breach of Contract occurs when parties have entered into a valid and binding contract and one of them breaches it by failing to perform some provision of the contract.
What then happens in a lawsuit setting is that a client would consult with me about what is happening in the contract. I would then on behalf of my client prepare a demand letter depending upon the type of contact it is and what they are seeking in relief.
In a Breach of Contract case, again, as in the elements of contract, breach of contract has certain elements and I think everyone has a basic understanding of a breach of contract.
“Hey, we had an agreement and you didn’t fulfill your side of it. In the eyes of the law you have to plead in your complaint, certain elements of a breach of contract.”
The first element is there was a valid and binding contract. Which has the sub-part of everything we just discussed.
And the next element is one of the parties to the contract breached that contract meaning that they either didn’t pay the other party or they failed to perform certain services that they were contracted to do. Any number of things.
And the third element is that they non-breaching party suffered damages as a result of the breach of the other party. And damages are monetary damages. Like as a result of this, I’ve lost money. And that is a basic understanding of what a contract is and what a breach of contract is.
A breach of contract is the legal name given to a civil cause of action for a situation in which a person or company does not comply with a contract with another person or company.
Now everyone has a pretty basic understanding of what a contract is. Two people decide they want to do some type of business together. Party A says, “I will agree to pay you a sum of money and in return you agree to give me goods or services.”
So the breach of contract occurs most commonly when the second party, Party B, supplies goods or services and the other party fails to pay for it or vice versa. If one party pays for the goods or services and the second party fails to provide them or provide them in a way that complies with the contract, the contract is in breach. And that’s what a breach of contract is.
Yes. Breach of Contract is one of the most common causes of action in business litigation. The contracts at issue can vary wildly but ultimately it comes down to the same few elements. If a plaintiff can provide evidence to support these elements then, yes, you can bring a breach of contract lawsuit:
- Was there a valid contract between the parties?
- Did the defendant materially breach that contract?
- And if so, was the plaintiff then financially injured as a result of that breach?
In Florida Breach of Contract Law there are specific elements that have to be pled in a complaint to set forth a cause of action for a breach of contract to occur. The elements are:
- There was a contract
- The contract was breached
- As a result of the breach of contract, the plaintiff suffered damages
Element One: There Was a Contract
So for element number one,There Was a Contract, that’s generally easy to establish. Party A entered into a written contract with Party B, and Party A and Party B agreed to do certain things pursuant to the contract.
Element Two: A Breach of Contract Occurred
Element two, the Breach of Contract Occurred or the contract was breached. The element within the third element is often times where the majority of litigations can take place. In Element two a breach occurred. You need to have suffered a material breach of the contract.
What is a contract? This is what I see as an Orlando, Florida, business litigation attorney. Many business litigation issues arise over contracts. Often times a breach will come down to the contract. So I’m going to talk about what a legally binding contract is.
A contract is an exchange of legally enforceable promises between two or more parties. A contract also includes three primary elements:
- There’s an offer: An offer occurs when someone offers to do something for another party. It can be services, it can be a sale of goods, it can be a great number of things.
- There’s an acceptance: An acceptance means that the party to whom the offer is made has the authority and the ability to accept it and can indeed accept it and agree to it. “Yes I agree to purchase those goods or purchase those services from you.”
- The third element is consideration. Consideration means that the parties that are bargaining with each other agree there is something like consideration that is of value to each party.
Those are your basic elements for a contract to be legally enforceable in Florida.
A contract also has other requirements to make it legally enforceable. For example a contract must be entered into between parties that have the capacity to contract.
An example would be if a minor entered into a contract. Minors by definition of law lack capacity to contract.
Another example of a requirement of a contract is that it must be entered into voluntarily meaning you can’t force someone into contract. It has to be an offer an acceptance between parties who are willing to do so without any force involved.
A contract must also include an exchange or bargain. This is similar to a consideration. The parties are bargaining with each other for what exactly they want.
For example Party A may say, “I will sell you 100 widgets at one dollar each.” Party two can say, “no I think that’s too high let’s make it 90 cents per widget.” That is something that is required in a contract. There must be a bargain and exchange.
And finally a contract cannot be for something illegal. If parties contract to do something that is illegal that contract is void by law. It is unenforceable and it is not a contract.
So those are the basic terms of the contract. If you’re having problems with a contract, let’s talk about what happened to you and see how I might be able to help you fix it.
A Material Breach of Contract is something that makes the object of the contract that was not accomplished. For example, say Party A enters into a contract with Party B to purchase widgets.
Party A says, “I will pay you $1,000 for 10 widgets.” Party B agrees, “yes I will supply you with 10 widgets upon receiving $1,000.” Party A pays Party B $1,000 and then Party B only supplies five widgets.
This would be a material breach of contract because it has only been 50% complied with and Party A has not received all of the goods for which was contracted.
The third element of a breach of contract is damages or Damages for a Breach. What damages did someone suffer as a result of a breach of contract?
Well let’s go back to our Parties A and B contracted for widgets. Party A has suffered damages because Party A did not receive the widgets that he paid for from Party B. Now Party A can sue for damages.
You know when you had 10 widgets for $1,000 that’s $100 per widget, so a proper remedy to bear may be for Party B to pay Party A $500 of the purchase price. There are other potential damages available but that is a basic explanation of how a breach of contract law is in Florida.
If you’ve reached the point where the breach is not being settled, you’ll need an attorney. For example, I write the breaching party a demand letter. Sometimes I’ll prepare an entire demand package with a draft complaint to let the party know that should they fail to correct this right away we will be filing a lawsuit immediately.
And depending upon the type of relief sought–be it either monetary or for some other kind of event to occur or to correct the breaching action on a contract—we ask what we want corrected.
If the breaching party corrects the action, the Breach of Contract is Corrected and your case is complete. If the breaching party does not correct the breached action, you’ll contact an attorney to do whatever it is that you are demanding.
In a Breach of Contract lawsuit, I would then file a lawsuit on behalf of my client for a breach of contract. I say Breach of Contract, but there are all kinds of contracts that can be breaches. If there was a contract in breach and the plaintiff is owed money as a result, it becomes a legal issue. A breach of contract action may last 18 to 24 months like most business lawsuits.
If you’ve had a situation where a client, a partner, a shareholder, a business that you work with has breached an agreement and will not right the wrong committed, it’s a good idea to begin talking with an experienced business litigation attorney. Find out where you stand and what legal actions can be taken to right the wrongs committed against you or your business.
A Breach of a Note is where someone loaned money and they want it back. It’s a breach of some type of a business agreement like, “I hired Don to develop an app and paid him and he didn’t do it and I want my money back.”
I say Breach of Contract but there are all kinds of contracts that can be breaches. If there was a contract in breach and the plaintiff is owed money as a result.
Is the breach of contract due to the fact that the contract has been written poorly from the start? If it’s a poorly written contract, you could still have a breach of contract claim, perhaps. But there are other actions that you bring.
A breach of contract is an action at Law. So if you think of the old English words, you have a Court of Law and the Court of Equity.
So in the Court of Law that deals with Breach of Contract that is very easily put into monetary terms. And you also had the Court of Equity. And the Court of Equity is like, saying, “let’s do the right thing.”
And so when you plead a breach of contract, there are other claims, they term them equitable claims although the results would also be money.
But let’s say the contract is poorly written, there are discrepancies, there’s things of that nature that a judge or jury may say, “well, this isn’t really clear, I don’t know what happened here.”
Specific Performance is a remedy to a breach of contract situation. The most common use for specific performance as a remedy is found in the realm of real estate.
For example, if you contract to purchase a house and you get beyond the inspection period during which time the contract could be revoked and then the seller decides he or she does not want to sell, you could sue based on the contract for specific performance forcing the seller to perform under the contract and sell you the house. And that is what specific performance means. It means you are entitled to what is specified in the contract.
So in the alternative, I would plead an Equitable Claim, such as Unjust Enrichment. And what that means is that the plaintiff conferred a benefit upon you, the defendant, and you did not pay him for that benefit.
It’s an unjust enrichment so you have different equitable claims that fall into this realm. So there you have unjust enrichment.
You also have Quantum Meruit and those are breach of claims that you would bring up in a breach of contract context that in the event the contract seemed unenforceable or uninterpretable or something of that nature that it boils down to, “Hey, you’ve been conferred a benefit and my client is entitled to a monetary reward for that benefit.”
Now what you lose often times by having to do that is generally the contract claim will have like an attorney’s fees provision or something of that nature that makes it more valuable than that of the equitable claim.
But you have those claims available in the event the contract claim tanks. And also kind of in that same realm related to what you’re getting at with the contracts…let’s say plaintiff and defendant are negotiating a contract who’s going to do what, who can do what, has the ability to do what and the defendant totally oversells his or her ability to perform and they know they are doing it when they are negotiating.
Well then you could have a fraud in the inducement claim. You fraudulently represented yourself to me to get me to enter into this contract with you.
Rescission is a remedy in a breach of contract situation. Rescission means that the contract the parties entered into is undone and unwound thereby placing the parties back in the position they were before the contract was entered into.
Often times the remedy of rescission is sought when one party to the contract repeatedly fails to comply with the terms of the contract. The other party then filed a lawsuit to rescind the contract and request that the court enter an order stating that the contract has been rescinded and is no longer in place and the partners do not have to comply with its terms. And on that answer I think I may have said it’s a remedy. It’s a cause of action in Florida. Rescission is a cause of action in Florida.
A contract in Florida can be written or verbal. And a verbal contract can be enforceable. A verbal contract is legitimate if it meets all of the elements required to form a binding contract. Those elements include one that the parties enter into an agreement whereby each party is agreeing to exchange something to the other.
The length of time a Breach of Contract lawsuit may take can vary widely. Sometimes as soon as a complaint is filed for breach of contract the parties enter into negotiation and the case is settled very quickly.
Other times however when a breach of contract action is filed the parties are unable to reach an agreement and it may be litigated for many months and ultimately go to trial. In the situation where a lawsuit goes to trial the average time period is 18 to 24 months from start to finish. Again however it is very difficult to predict how long exactly a lawsuit may take.
The answer to What’s the Best Way to Handle a Broken Contract is often subjective. Some people take great offense when someone breaks a contract with them. In that situation a lawsuit is often the result. Other people may not be so quick to dive right into a lawsuit and may attempt to work something out with the other party without the need of a lawsuit. Ultimately the best way to handle a broken contract is the client’s decision.
Typically what happens when a situation or a contract has been breached is that the non-breaching party contact an attorney. The attorney would then send a correspondence to the breaching party explaining to the breaching party what has taken place why the non-breaching party believes a breach has occurred and requests the breaching party either correct the breach or enter into negotiations with the non-breaching party in an effort to resolve the issue. If that is unsuccessful the next step is usually to file a lawsuit against the breaching party in the proper venue and jurisdiction and pursue a legal remedy for the breached contract.
The value of a breach of contract lawsuit depends upon the contract itself. If the goods or services that are being contracted for is only valued at $10,000 then that is the approximate value of the breach of contract lawsuit.
If the goods or services that are the subject of the contract are valued at $1 million then that would be general value of the breach of contract lawsuit. So this question is directly linked for what the parties are contracting for.
Generally yes you may sue someone who breached a contract with you. The first issue to be resolved in a breach of contract situation is whether or not you are within the statute of limitations which is the time period during which a lawsuit must be instituted. If it is a written contract the law in Florida is you have five years to file a lawsuit against the breaching party. If it is a verbal contract the law is you have four years to institute a lawsuit against the breaching party.
Once you have determined that the statute of limitations has not run out you would then analyze do you have a valid cause of action for breach of contract against someone. To analyze that first look to the contract see what the terms are. If a party has clearly violated the terms of the contract and as a result of that you have suffered monetary damages then yes you may pursue someone for a breach of contract.
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