A valid contract may be written, oral, or implied by conduct. A breach of contract is any situation in which one or both parties fail to perform their duties or deliver products agreed upon in a contract. Breach of contract usually comes in two forms: (1) material and (2) immaterial. Material breaches are when one party receives a product or service significantly different from what the contract promised. This breach releases the other party from the contract, so payment for any services is no longer owed.
Immaterial breaches of contract are when one party fails to perform some part of the contract, but the other party still receives their product or service. For example, a small delay in delivery would result in a minor breach because the other party still received what was promised, albeit slightly later. Wronged parties would still be required to pay for services in minor breaches, as the primary aspects of the contract are substantially performed.
One party extends an offer, and the other agrees to its terms.
Both sides receive something of value by entering into the deal (also called mutual assent)
The parties have the legal ability to form the contract.
The purpose of the contract is legal.
A contract is an agreement to do or not to do a certain thing and gives rise to an obligation or legal duty that is enforceable in an action at law. A complaint must plead the existence of a contract and its terms that establish the obligation at issue. If the lawsuit is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint, or a copy of the written contract must be attached to the complaint and incorporated by reference.
The plaintiff must prove he has fulfilled his obligations and complied with any and all conditions and agreements of the contract that he is required to perform. If plaintiff was unable to perform because defendant prevented him from doing so, plaintiff must allege such excuse for non-performance in the complaint.
Breach can be the result of (1) the defendant’s specific acts or conduct; (2) the defendant’s negligent performance; or (3) the defendant’s failure to act or perform. Plaintiff must allege sufficient facts to apprise the defendant of the specific conduct that violates the contract, but need not allege evidentiary facts.
There are numerous remedies that a plaintiff may pursue against the defendant. The most popular remedy is called damages which is monetary compensation for all detriment proximately caused by the breach by the defendant. An interesting remedy is called Specific Performance. However this remedy cannot be pursued if money damages are adequate.
Contracting can be very creative. Before entering into a contract, take the time to really think about what you wanted stated in your contract. Think about what truly benefits you. For example, traditionally, each party to a breach of contract suit must bear the cost of their own attorney fees. This is called the American rule. Many times people will not pursue a breach of contract suit due to the high cost of hiring an attorney. But what if you could get around this. The rules of contracting allow parties to insert into their contract that the prevailing party will be awarded their reasonable attorney fees from the losing party. Having this clause in your contract creates great incentive for parties to either settle quickly out of court or aggressively move forward with filing suit when the facts support you will prevail in your claim for breach of contract.
Another great clause to insert in a venue clause. This is where the lawsuit will be filed in the event a breach of contract occurs. For example, let’s say you live in San Bernardino county (Southern California) but the breaching party lives up in Humbolt county (Northern California). As a general rule, most lawsuits relating to a breach of contract will be filed in the county where the defendant is located. This would be a great inconvenience due how far away this county is located as well as not knowing anyone in that area. You could get around this inconvenience by placing a venue clause in your contract that states all litigation relevant to the contract will be filed in San Bernardino Superior Court. Problem solved.
Due to the complexities associated to contract law, it is in you best interest to consult with the Law Office of Eric J. Rechsteiner before entering into your next contract. A contractual term that may seem innocuous during the formation stage of the contract may have devastating effects later during the executory phase of the contract.