Frequently Asked Questions (FAQs)
Estate Planning; Wills & Trusts
Pre-Nuptial Agreements, Divorce, Child Custody and Support, and Alimony
Contracts Questions
- What is “breach of contract”?
- Does every breach of contract require a suit?
- Why should I have an attorney if there is a “material” breach of contract?
- When does Common Law apply vs the Uniform Commercial Code (UCC)?
- What types of damages are involved with breach of contract?
- Who pays the attorney fees and court costs for a contract dispute?
- How will Attorney MacDonald help me with a contract dispute?
Contract Law
Today our lives are filled with contracts. Some of these contracts are relatively minor (buying a ticket to a movie or sporting event), while others are major and carry serious financial implications (buying a home or car). When we rely on a person or business to hold up their end of the bargain and they fail to do so, we then have what the law refers to as a breach of contract.
To have a contract suit, you must first show that there was a valid contract and that the other party breached the contract by failing to do what they promised to do. Not every contract breach requires a lawsuit. If a party to a contract makes a mistake, or does not carry out the contract as specified in a relatively minor way, it may be appropriate, and in some cases even required, that you give the offending party a chance to make the situation right, this is called “curing.”
If a breach of contract raises to the level of being, “material” or “major” then your duty to carry out your obligations under the contract may be suspended, and you may be entitled to damages. It is very important to consult with an attorney to determine what law governs your contract action, what steps must be taken (if any) to give the offending party a chance to repair the damage done, and what your rights are going forward to court. I can help you evaluate your case and decide which plan of action is best suited for your situation. There are often factors to consider outside of the basic contract and its alleged breach. Factors such as a future relationship, either business or personal between the parties, counter or cross claims that the breaching party may bring if sued, and cost are all factors worth appraising prior to settling on a course of action.
The type of contract you are seeking to enforce or defend will determine the type of law that applies. Common law applies to most contracts, while the Uniform Commercial Code (UCC) generally applies to most contracts for the sale of goods. The UCC has been adopted by many states and incorporated into state law. It is important to consult an attorney who is familiar with the UCC and its very specific requirements.
Plaintiffs in contract cases have several specific types of damages that they may pursue. They are as follows:
- Compensatory Damages - Money that is paid to you to reimburse you for any losses.
- Consequential and Incidental Damages - Money that is due to you because of foreseeable damages that occurred because of the breach of the contract. The test here is whether at the time the contract was formed each side reasonably knew of the potential for these incidental damages should there be a breach.
- Attorney's fees and/or costs of litigation - Generally in the U.S. each side of a dispute is expected to pay for their own legal counsel, however if the contract specifically shifts the liability onto the losing party then these too may be recoverable.
- Liquidated Damages - If at the time of contracting the monetary value of the possible damages were difficult to ascertain, then the court may allow a fixed amount agreed upon by the parties to serve as the damages in the case of a breach. So, for example, a clause in a contract may state: “If either party breaches this contract they will pay $5,000.00 to the non-breaching party.” Depending on the circumstances and nature of the contract this may or may not be a valid liquidated damages clause.
- Specific Performance - This is where the court orders the contract to be carried out as it was initially supposed to be carried out. This is almost never applied in personal service contracts (such as a painter) because of the difficulty of insuring that a good job is done. This is most often a remedy in real estate cases where money damages would not be adequate, so the court orders the real estate sale to go through as initially contracted.
- Punitive Damages - These are also known as “punishment damages” and are seldom awarded in contract cases. The purpose of punitive damages is to serve as a deterrent to the party at fault from repeating the offending conduct.
- Rescission - This is where the court cancels the contract altogether or excuses one party from performing their half of the bargain.
- Reformation - The court may change the terms in a contract to make them reflect what the parties actually intended the contract to mean.
I represent clients who are seeking to enforce contracts, or who are seeking to defend their failure or inability to perform their part of a contract. Many business contracts must be handled delicately and with discretion due to the effect of negative publicity and the possibility of future commercial contact between the parties. There is no boiler plate approach to a contract claim or dispute, I evaluate each situation and assist my clients in reaching their desired resolution.
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