How a Contract Breach Attorney Can Safeguard Your Legal Rights
Contract Breaches 101
It’s important to understand what a "breach" of contract is and how a breach of contract lawyer can be of benefit in these instances. A "breach" can be caused by one party failing to perform their responsibilities according to the contract. A breach could also consist of one party not living up to their obligations or promises.
In addition, there are four types of contract breaches:
• Minor
• Material
• Fundamental
• Anticipatory
A "minor" breach doesn’t go against a contract in any significant way. The affected party may be entitled to some type of compensation, but this would only cover the small loss that they suffered because of the minor breach.
Examples of minor breaches
• Failing to pay a monthly contract fee on time
• Regretting signing a contract within the designated "cooling off" period and getting hit with a cooling off fee , or a fee for withdrawal
A "material" breach has a direct impact on the contract. The affected party might be entitled to receive compensation for any damages incurred because of the contract terms and the breach.
Examples of material breaches
• Delivering a defective product
• Providing defective services
• Not paying for products or services provided according to the contract
A "fundamental" breach is a substantial breach that may put the contract into jeopardy. The non-breaching party now has the option of treating the contract as if it never existed, and seeking damages.
Examples of fundamental breaches
• Shipments that do not meet contract specifications after countless chances to replace or modify the wrong shipment
• A party in a long-term contract missing deadlines consistently
A "anticipatory" breach occurs when one party has reason to suspect that the other party will not live up to the terms of the contract.
Examples of anticipatory breaches
• Calling one day before the contract deadline to let the other party know that you will not be fulfilling your responsibility for performance
• Telling a client a month in advance that you cannot deliver their order on time
How a Breach of Contract Attorney Can Assist
A breach of contract lawyer plays an integral role in protecting the rights of individuals or businesses who have been damaged by a breach of contract. Yet, prior to proceeding down any legal road, you must first determine whether or not you should pursue contractual enforcement or whether you may have breached a contract yourself. A breach of contract lawyer can assist in guiding you through that process as well.
First, a breach of contract lawyer will review the terms of the contract and identify if any breach occurred. In addition, he/she will help the client navigate the process of determining whether or not that breach of contract in fact caused damage to the other side and if so, how much those damages are. Importantly, the breach of contract lawyer will also help navigate you through whether or not you could be liable for breaching the contract.
Many times, contracting parties desire to maintain both the business relationship and their contractual agreement and only seek an amicable resolution to the dispute. A qualified breach of contract lawyer will assist in effecting that resolution through negotiation or mediation. A breach of contract lawyer may also enforce the terms of the contract or "perform" upon the contract if you receive or send an appropriate demand letter.
If all else fails, a breach of contract lawyer can pursue a legal remedy by filing a lawsuit in order to recover damages caused by the breach of contract as well as insist on the breaching party perform under the contract. More commonly, however, damages are sought by the injured party in the amount expressly contemplated by the Contract or contained in the state’s statutes.
Typical Legal Outcomes for Contract Breaches
Possible Remedies for Breach of Contract
The legal remedies for a breach of contract include:
- (1) Actual damages
- (2) Liquidated damages
- (3) Rescission
- (4) Specific performance
- (5) Attorney’s fees as provided in the contract and/or applicable law
Actual damages are the amount of money that will fairly and reasonably compensate the non-breaching party for its loss. Since contract breaches vary greatly in terms of the harm they cause, courts frequently calculate damages in different ways. Most commonly, however, damages for breach of contract include: (1) the difference between the market price of the goods and the contract price if the goods are repossessed; or (2) the difference between the market price at the time a delivery would have been due and the contract price, if the goods are not repossessed, plus incidental damages. Restatement 2d of Contracts §346. Courts also calculate damages for breach of contract in a variety of other ways, based on the facts of an individual case.
Liquidated damages are a fixed amount that the parties have agreed to pay in the event of a breach.
Rescission is a remedy that does not award monetary damages. As mentioned above, it voids the contract as though it never existed. A court may rescind a contract when no damages are adequate to make one innocent party whole. Rescission is most often used when there has been a defective product or service received and cannot provide the non-breaching party with the benefit of its bargain,
Specific performance is a equitable remedy whereby the court orders the breaching party to perform its side of the contract. It is typically used when the subject matter of the contract is very unique and damages are NOT an adequate remedy. Specific performance forces a party through specific order of performance rather than through an award of damages and is usually limited to the sale of real property because one cannot simply award a person with a piece of real property. A court can grant specific performance in the following situations:
- When the services required under the contract can only be performed by the defendant and only these services will suffice, in which case any monetary damages would be insufficient;
- In a contract calling for personal attention by the defendant, if such performance would result in a great loss to the plaintiff and, since there was no substitute available, this will mean a direct loss of money to the plaintiff, in which case specific performance may be the only remedy; and
- In a contract for the sale of real estate when unique real estate is involved and monetary damages would be wholly inadequate because it would not be possible for the plaintiff to seek out another parcel of property exactly like the parcel specified in the contract. This is the most common situation for specific performance.
Depending upon the specific contract and the type of breach, one remedy may be preferred over the other.
Finally, attorneys’ fees are widely shifting on how each group may want to have them in a contract. While attorneys’ fees are typically awarded to the prevailing party if the contract so provides, the language must be clear and unambiguous:
(1) To be entitled to an award of attorney’s fees:
(a) A party must be a prevailing party,
(b) It must have been necessary to prosecute or defend the action, and
(c) If a claim or defense was frivolous, groundless, or against public policy, attorney’s fees may be awarded.
(2) To recover attorney’s fees, the party must prove performance under the contract if the other party has not waived performance, and the party seeking recovery must provide a trial court with evidence of the amount of attorney’s fees incurred.
(3) To recover fees on appeal, the party seeking attorney’s fees should file a motion for sanctions within 30 days after the final judgment is rendered. It should be a separate appellate brief just like the request for attorneys’ fees in the trial court.
When You Need a Breach of Contract Attorney
If you suspect that your case may go to litigation, or if you are considering pursuing litigation as you have failed to reach resolution of the dispute with the other party, on this side of the application of the law you will want an experienced breach of contract attorney to represent you in the action.
If the breaches of contract have continued to happen, if they are ongoing, or if you and the other party have already gone through the process of reconciling, it can all be very complicated. It is important to speak with an attorney as soon as possible to find out which steps you need to take to protect your interests in the future. Assuming that the contract is still valid, if the other party has breached the contract in any specific way, it may be necessary to still follow the procedures in the contract to either attempt to mediate a solution or to obtain compensation while still under contract. If the contractual agreement has actually been terminated, then you would be able to either file a lawsuit or request compensation from the breaching business in an expedited fashion.
The information on this site is for general information purposes only and should not be relied upon as legal advice or as a substitute for legal counsel. This site does not create an attorney-client relationship. A qualified attorney should be consulted about your individual situation.
How to Select the Right Breach of Contract Lawyer
If you are involved in a contract dispute, the lawyer you select will have a major effect on the outcome. Before hiring an attorney, it is essential to consider your needs and find someone who is qualified to meet them. You may want to approach your selection by asking the following questions:
Experience
A lawyer’s experience can be important, especially if there is the possibility of your case going to trial. You’ll want someone who has dealt with cases similar to yours and has succeeded. Ask the lawyer if he or she specializes in this area. In some cases, the best breach of contract lawyer isn’t a general practitioner, but a solicitor who only deals in this area of the law.
Track Record
Similarly, you’ll want to see not only that the lawyer has dealt with cases like yours before, but that he has won them. Ask the lawyer how many cases they have taken to trial and how many of those are won. The more satisfied clients the lawyer has, the better they will be able to represent your interests.
Communication and Availability
If you have a lot of communication with your lawyer, it is important that you get along. If you cannot work together and do not respect your respective expertise , the working relationship may falter. This can be detrimental because if you try to go around your lawyer and solve things yourself, you run the risk of ruining the whole case. The same goes for the lawyer communicating with you. If your lawyer does not update you regarding the case and its progress, it will not be able to represent you effectively. You need a lawyer who understands that you will have questions and concerns, and who is willing to address those issues.
Fees and Billing Transparency
Many practitioners charge hourly, so ask the lawyer how much they charge. Also, average legal fees will vary by city. Determine whether your future legal costs will be an issue for your personal finances. The lawyer you choose should be honest about the costs. If the estimate seems greater than you initially thought, take the time to plan for possible expenses so you aren’t scrambling to pay your bills later.
Legal Representation
If you’re uncomfortable with your lawyer’s plan of action, tell him or her right away. It’s easy to tell yourself that the lawyer knows what he or she is doing and wants the best for you. If you feel uncertain, however, tell them. Especially if the lawyer is giving you his or her own advice without seeking your input, you may want to think twice about who you’ve chosen to represent you.
Examples of Successful Breach of Contract Cases
To illustrate how a breach of contract lawyer can be an invaluable resource, let’s examine a few case studies:
Company A vs. Supplier B
When Company A decided to outsource its production, it entered into a five-year contract with Supplier B. Three years into the contract, Supplier B abruptly abandoned their agreement, citing financial problems.
Although entering into a new agreement was easy for Company A, they were now six months behind schedule and suffering major losses. Company A promptly sued for damages and the following happened:
In this instance, the breach of contract lawyer was able to win a relatively swift settlement that allowed for more substantial damages than originally expected.
Company C vs. Employee D
After ten years with the organization, Company C decided to lay off Employee D as part of a larger downsizing plan. However, a year later, they discovered that Employee D had been secretly stealing from Company C.
On one hand, Company C had to spend a large sum of money to defend against the lawsuit brought by Employee D for wrongful termination.
On the other hand, the breach of contract lawyer was able to prove that Employee D had not only broken his employment contract but that he had also violated various laws pertaining to his industry. Company C recouped their legal fees and employee D was not only terminated from the company but also blackballed from the industry.
Company E vs. Employee F
This case is somewhat a hybrid of the two above. A highly titled executive left Company E in a successful career move to another company. Six months after the executive left, Company E was shocked to learn that Employee F, their director of sales and marketing, was now in the employ of their key competitor, utilizing the "know-how" he had gained with Company E to enhance his new employer’s position in the market.
True, this isn’t exactly a breach of contract case but the sale of non-public corporate information.
Company E quickly fired Employee F and turned their breach of contract lawyer loose for an "injunction" in an "unfair competition" action against the new employer. Without going into detail, the competition was enjoined from transferring the information gained while at Company E to the new employer’s benefit.
The above successes typically require fewer than 25 hours to achieve a satisfactory result. All of it can be done on either a fixed fee or by the hour basis.
How to Prevent Breaches of Contract
Maintaining strong contract management processes from the outset and updating them as business needs change goes a long way toward avoiding disputes in the first place. Even the best-constructed business relationships have their ups and downs, but well-drafted contracts reduce the likelihood of disputes by clearly defining the performance obligations of each party and the term of the contract, and by addressing in advance the most common risks that can lead to a breach. In addition, often, regular contract review enables an organization to identify business changes that create or exacerbate vulnerabilities .
Many breaches are the direct result of one of two situations: Either the contract is not clear and leaves too much room for interpretation, or conditions that existed when the parties entered into the contract are no longer relevant because of changes in the marketplace or other factors—something that evidently occurred with the Taylor Swift case. At the outset of your relationship, you and the other party should clearly define what constitutes breach and thoroughly describe what happens—both contractually and in terms of remedy—if the contract is breached. If your relationship with one or more parties takes a turn for the worse, you do not want to be arguing over what the contract actually says.