BREACH OF CONTRACT: AT WHAT POINT CAN YOU SUE?
Updated: Oct 10
At what point can you sue for breach of contract? Or, put legally, at what point would a party to an agreement be entitled to file a lawsuit for breach of contract? The simple answer is when a party to a valid and enforceable contract commits a substantial breach of the contract. This is somewhat circular, but that is in part because a more specific answer, like many legal questions, depends on the facts and circumstances.
The following will first cover why should get an agreement in writing and your general options when you are faced with a breach. Then we will focus on the elements of a breach of contract claim and touch on a prospective defendant’s potential defenses, which should also be considered when you are weighing your options.
WHY WE SHOULD REDUCE OUR AGREEMENTS TO WRITING
You should always “memorialize” important agreements in writing, preferably in the form of a well written contract.
First, to state the obvious, the future sometimes fails to resemble even our most reasonable expectations; so, just in case things do go wrong, you want to get it in writing to protect your interests.
Along with protecting your interests, a well-written contract also confers rights, imposes duties, delineates the parties’ respective obligations; it provides a guide, a set of instructions, a roadmap for the relationship. If a dispute does arise, a contract should also increase the likelihood that the dispute can be resolved without litigation.
A contract, however, is not a guarantee. It cannot encompass all possibilities. Even if a contract could, it cannot force the parties to perform fully or respect the spirit of the agreement. Many disputes do not even arise from unforeseen circumstances, or wrongful or bad faith conduct; rather, they often arise from mistakes, misunderstandings, genuine disagreements.
Whatever the cause of the dispute, when a party fails to fully perform their part of an agreement, the law may entitle the other party to a legal remedy.
THE INJURED PARTY’S OPTIONS
When a breach of contract occurs, generally the injured party’s options are to terminate the contract, negotiate, or file a lawsuit. Or just let it go. Often, just letting it go is the best option because it may not be worth going to court over. Sure, you can fight your way up to the U.S. Supreme Court over fifty cabbages, or at least try, but more importantly is fifty cabbages worth fighting all the way up the Hill? Or any hill for that matter? This is an important question.
The judicial system generally favors non-judicial resolution. It is not only encouraged, but the legal process is often structured to provide opportunities and incentives to avoid litigation. For example, before a claimant can file a claim for breach of contract, he or she must send a statutorily sufficient demand letter and wait a certain number of days before filing suit. Even after a lawsuit has been initiated, the parties and their attorneys will continue to try to settle the case, and the court will encourage the parties to resolve their dispute through avenues such as arbitration or mediation. In some cases, alternative dispute resolution is required by the contract.
Deciding how to respond to a breach of contract is a strategic question.
ELEMENTS OF BREACH OF CONTRACT
A breach of contract action is a civil action, meaning that it is between or among natural or corporate persons. A Contract has varied definitions depending on what aspect is focused on. The Restatement (Second) of Contracts § 1 (1981), defines a Contract as, “[A] promise or set of promises for the breach of which the law gives a remedy, or the performance of which the law recognizes as a duty." Id.
In Florida, when one or more parties to an agreement fails to perform all or part of their promise, whether they can succeed at trial generally depends on whether that party can establish the following elements:
1. The existence of a contract,
2. A breach of the contract, and
3. Damages resulting from the breach.
These are the fundamental elements of a breach of contract case, but depending on what issues are in dispute, the plaintiff may have to prove other requisites. For example, if the existence of a binding contract is in dispute, the plaintiff may have to also prove the existence of the disputed contractual elements.
PROOF OF THE EXISTENCE OF A CONTRACT
In a breach of contract action, the first question is whether there is a contract. In most cases this is easy: you show the court the signed agreement. Alternatively, agreements that are not in writing can be inferred by written or spoken words, by acts or failures to act, or from other types of evidence.
Presuming that the required elements are present, oral agreements by their nature lack clear terms of agreement. And the parties might dispute what exactly was agreed to. In some cases, the court may “fill the gap” by implying reasonable terms. Generally, however, proof in such cases requires evidence that is not only admissible but also convincing.
PROOF OF BREACH OF CONTRACT
The next step is to show that the defendant breached the terms of the contract. Not to overcomplicate things, but there are different types of breaches. Aside from the more commonplace “actual” or “outright” breach, a breach may also occur if a party deprives the innocent party of a substantial part of the benefit of their bargain. Or, in cases of “anticipatory breach,” a party’s conduct reasonably indicates that they do not intend to perform; and, upon request, the party sending mixed messages or worrisome signals fails to provide adequate assurances that they indeed shall perform.
Additionally, when considering your options, you should also consider whether the nature of the alleged breach is fundamental, material, substantial, trivial, or a combination. Not every literal or technical breach of a contract enables you to bring an action for breach of contract on which you are likely to prevail.
PROOF OF DAMAGES
Once the plaintiff establishes that an enforceable contract exists and that the defendant breached the contract, the plaintiff must prove that as a consequence of the breach they suffered an ascertainable amount of compensable harm.
In some cases, proving damages might be easy. For example, an Early Termination Clause in a rental agreement can stipulate that if the tenant terminates the lease before it expires the tenant must pay a certain amount to the landlord. In other cases, damages may be proven by evidence such as receipts or expert testimony.
DEFENSES TO A BREACH OF CONTRACT.
The various defenses to a breach of contract claim are too numerous and complicated to discuss at length. Moreover, what defenses are available to any given defendant also depends on the facts and circumstances. That being said, the following are common defenses to a breach of contract claim:
· The claim is barred by the Statute of Frauds, which requires certain contracts to be in writing and perhaps signed by two witnesses,
· The statute of limitations has expired,
· The contract is void or not enforceable,
· The agreement was induced by fraud or duress, or
· The plaintiff breached the contract first, excusing the defendant’s obligation to perform under the contract.
If you are considering bringing a breach of contract claim, you should consider the prospective defendant’s probable defenses. Keep in mind, some defenses, including the ones above, are what are called “affirmative defenses,” which means that even if the claim can be established, these defenses can still defeat the claim.
We are all optimistic about our ventures, but relationships evolve, memories fade, misunderstandings come to light, and regardless of our foresight and precaution, circumstances are often like the wind. The same is true even if the agreement is in writing.
This and other reasons are why, in order to best protect your interests, you should not only get an agreement in writing and signed by both parties, but first hire an attorney to advise you on your options and draft a well-written agreement.
Last updated: September 09, 2022.
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Michael N. Bress, Esq.
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