Can I Sue for Breach of Contract?
Yes, if you had a contract with another party and they failed to perform as agreed, you can file a lawsuit to recover money. If you do want to sue someone for breaking a contract, you may want to get legal advice from an experienced contract lawyer.
What is a breach of contract?
A contract is a legally binding agreement between two or more parties to do something in exchange for something of value. When someone makes an agreement, the parties rely on the bargain that was agreed on. If one party doesn't follow through on its promise, it can cause financial losses for the injured party.
A breach is a failure to perform a contractual promise. This could be a failure to pay for goods or services, failure to perform a job on time, or delivery of a different product than what was promised. Depending on the terms of the contract, the person who didn't breach the contract (the non-breaching party) can sue to get money for losses caused by the breach.
Do I have a breach of contract case?
If you enter into a contract and there is a dispute, you or the other party can file a lawsuit to have the contract enforced or to get money for any losses. You may be able to settle the dispute with the other party if you can both agree on what to do about the breach. However, if you do not accept the other side's offer, you can file a breach of contract case with the court.
For a breach of contract case, some of the issues that come up include:
- Was there a contract?
- What did the contract require from each party?
- Was there a breach?
- Was the breach material?
- Is there a valid defense for the breach?
- What damage was caused by the breach?
To make sure you have a case, you have to make sure you have a valid contract and that the contract is enforceable. The basic requirements for a contract are making an offer, accepting the offer, and exchanging something of value. Something of value could include a promise to pay money, provide a service, or deliver goods.
A verbal contract is generally valid but it can be harder to enforce than a written contract. If a contract wasn't written down, it may be a case of one person's word against the other. Breach of oral contract claims are often based on each side having a different version of what they agreed to. Be aware that some contracts must be in writing.
With a contract, one side offers to either do or not do something in exchange for something of value. The most common type of business contract might involve a small business buying goods from a vendor.
The parties set out the terms of their contract in the offer. Depending on those terms, the vendor may be required to deliver a certain item, with the quantity, specifics, and delivery date laid out in the agreement. The contract would generally require the business to pay the vendor, with the terms of down payment, payment schedule, and manner of payment in the contract.
A breach happens when one party fails to fulfill a contractual promise. For example, a party that agreed to make a payment in exchange for goods might fail to pay. In some cases, the breach can happen before the promise is to be performed. When this happens, it is said to be an anticipatory breach of the contract.
There are two types of contractual breaches: immaterial and material. Immaterial breaches are generally minor and the other party gets close to, if not exactly, what they bargained for. Material breaches go to the heart of the contract. A material breach deprives the non-breaching party of what they bargained for. Whether a breach is immaterial or material depends on the circumstances and the terms of the contract.
For example, if someone ordered 1,000 square feet of carpet padding and the padding delivered was a half-inch short but still usable, that may be considered an immaterial breach. However, if the contract was for a custom machinery part that was a half-inch short, it may be a material breach because it could be unusable for the intended purpose.
There may be legal defenses for the breaching party that allows them to fail to perform even if it breached the contract. For example, if the contract is to do something illegal, the court will generally void the contract. If someone only agreed to the contract because they were threatened, that could also be a defense.
Another possible defense is the statute of frauds. That is a law that requires certain contracts depending on their subject matter, such as those for the sale of goods above $500 or the sale of real estate, to be in writing. If you fail to get such a contract in writing, you won't be able to claim the contractual obligations.
A third defense is the statute of limitations. State laws vary on how much time you have to file a lawsuit for breach of contract. If you wait too long to file your lawsuit, you will be barred from recovering.
The losses in a civil lawsuit are known as damages. There are different kinds of damages in a breach of contract claim:
- Compensatory damages, also known as actual damages, are the direct losses to the non-breaching party. This is the most common type of damages awarded in a breach of contract lawsuit.
- Special damages are also called consequential damages. These may be actual losses that are not expected but were reasonably foreseeable when the contract was formed.
- Incidental damages are the expenses the non-breaching party has to cover because of the breach, like buying replacement goods or paying a higher price to another person to complete the job.
- Liquidated damages are specified in the contract terms. If compensatory damages are speculative or hard to prove, the parties may negotiate a set amount of damages and put it in the contract.
- Punitive damages are an award that is intended to punish the wrongful party or to discourage others from engaging in similar wrongful actions. These are very rarely awarded in breach of contract claims.
Other legal remedies may be available in a breach of contract case. For some contracts, you can sue for specific performance. Specific performance is an order from a court that requires the breaching party to perform their promise.
For example, if you had a contract to buy land and the other side finds someone who will buy the land for more than you, you could sue for specific performance and ask the court to order them to go through with the sale. Specific performance is available in only limited circumstances.
If your contract says so, you may be able to sue to recover your lawyer's fees, expenses, and the costs of your lawsuit. However, courts will generally award only those fees that are reasonable under the circumstances.
Who can file a breach of contract lawsuit?
Any party to the contract who suffered losses because of the breach can file a lawsuit. The breach does not need to be material. For example, if you signed a contract to build a website for a company and the company paid for most, but not all, of the work, you can sue for breach of the contract to recover the amount of money you were owed.
How do I file a breach of contract lawsuit?
Breach of contract lawsuits are generally handled by your county civil court. In some cases involving parties from different states, you may be able to sue in federal court if the dispute is over a particular amount.
If you are not out much money, you may be able to handle the case on your own in small claims court. Small claims courts are simpler to go through for individuals and you generally don't have to have an attorney. In fact, in some states, you can't have an attorney in small claims court. However, small claims courts can only decide cases under an amount specified by state law, between $2,500 and $25,000 depending on where you are.
If you want to file a breach of contract lawsuit, you should consider talking to an experienced contract lawyer. An attorney can review your case, explain your options under contract law, and file the lawsuit in civil court to recover money for your losses. Talk to an experienced contracts lawyer for legal help.