A breach of contract claim is the heart of almost all business litigation. The basic breach of contract elements require you to prove:
- There was a valid contract;
- You performed your part of the contract;
- The defendant failed to perform their part of the contract; and
- You sustained damages caused by the defendant’s breach.
If you relied on someone to do something they contracted to do and that person failed to do so, you may have a breach of contract claim.
The Four Breach of Contract Elements
The complaining party must prove all the breach of contract elements to have a successful breach of contract claim. You have four years from the date of the breach to bring your breach of contract claim. The court will typically dismiss any claims brought outside that window. There are exceptions to that rule where the defendant fraudulently concealed the breach or if the plaintiff was not aware that the breach occurred.
Was There a Valid Contract?
This element may be the most important and hardest to prove. A valid contract requires that all the following exist between the parties:
- An offer;
- Mutual acceptance of the terms;
- A meeting of the minds;
- Communication by both parties of their acceptance; and
- Mutual intent that the contract be legally binding.
In other words, there is a valid contract where one party offers to do something, the other party accepts, both parties are on the same page as far as the terms of the contract, and they intend to be legally bound by the terms.
A contract can even be unilateral. That is, if someone promises to do something or not do something in such a way that the other person is justified in relying upon that commitment. Unilateral contracts become enforceable once the promisor acts upon their promise.
Once the plaintiff proves that a valid contract existed, they must show that they upheld their part. After that, the plaintiff must show that the defendant did not fulfill their obligations. And finally there must be evidence of actual damages that the plaintiff suffered as a result.
What Damages Can the Plaintiff Recover?
Compensation for breach of contract claims is intended to place the plaintiff in the position they would have been in had the defendant never breached. Generally this means financial compensation.
General damages compensate for direct losses caused by the breach and include basic financial damages and reimbursement of costs. Special damages (also known as consequential damages) are less directly related damages that are nevertheless foreseeable as a result of the breach. For example, they might include compensation for profit loss because of delays due to the breach or because the plaintiff missed out on other business opportunities as a result.
Least common are equitable damages. This is when the court demands that the defendant follow through with performing their end of the contract.
Can an Oral Contract Be Breached?
The short answer is yes. Breaches of oral contracts are harder to prove, but the contracts are absolutely enforceable. Breach of oral contract elements are the same as for written contracts. The hardest part of proving a breach of contract for an oral agreement is proving that the contract existed and was valid. The plaintiff might have to present witness testimony to do so. They could also show evidence in the form of any sort of relevant document such as bills, emails, faxes, or other communications. If one or both parties acted to further the contract, that could prove that a contract existed. Not all oral contracts are valid, however.
The Statute of Frauds
The Statute of Frauds requires that certain contracts must always be in writing. These include contracts for sales/purchase of real estate, marriage, and wills. For a written contract to be enforceable, its essential terms must be clear.
There is an exception to the requirement that certain contracts must be in writing for a party to have a valid breach of contract claim. If one party begins to act on their obligations of an oral agreement that should be in writing, the court will not prevent them from enforcing the contract. The idea is that it would be unfair to deny enforcement because one side acted in reliance upon the agreement. Without enforcement, the party that tried to uphold their end suffers a detriment while the other party is unjustly enriched. For example, let’s say that one party agreed to sell their land to another party in return for money and for the buyer to do some necessary improvements to the land, like adding a new septic system. If the buyer paid the seller’s asking price and began to install the septic system and then the seller refused to give them the property, the court would likely enforce the contract.
Are There Any Defenses for Breach of Contract?
Yes! In some special circumstances, someone might be justified in breaching a contract. Those circumstances include:
- Material misrepresentations of fact—if someone was given misleading information or some important term was misrepresented, the contract would be void;
- Duress—the breaching party was pressured unfairly into signing; and
- Impossibility of performance—the breaching party is unable to fulfill their end based on uncontrollable circumstances.
A court would probably dismiss a breach of contract claim where no valid contract existed because:
- The contract or some of its terms were illegal;
- Essential terms were too vague or missing;
- A new agreement replaced the old contract;
- The contract was oral where a written one was required;
- There was a mutual mistake causing one or both parties to not perform their obligations; or
- Mistaken belief—neither party understood the terms.
A defendant might also have a defense where the plaintiff received the essential benefits of the contract so there was no material breach, did not actually suffer damages, or accepted alternative payment in lieu of contract fulfillment.
Contact the Hunnicutt Law Group to Discuss Your Case
The Hunnicutt Law Group attorneys are available to assist you with all your business needs. Experience in this area is crucial, and our practice focuses primarily on business disputes and litigation. Whether you are the plaintiff suing a breaching party or are accused of breach, we can help defend your legal rights.
Contact us today to discuss your options.