Whether you are receiving payment for goods and services that you provide, or you are paying someone else to supply you with goods and services, there is a contract involved. Sometimes the contract is verbal, and other times it is written and signed by the parties included in the transaction. In certain situations, a contract isn’t explicitly stated, but the subsequent actions of the individuals involved demonstrate that a contract is implied.There are three elements that establish a legally binding contract. One side makes an offer, the other side accepts, and something of value is exchanged. When one side fails to hold up their end of the bargain without a legally valid excuse, there is a breach of contract. Resolving the issue can be both costly and time-consuming. Fortunately, there are steps you can take to make the process easier, and an attorney that specializes in contract law can help.
Breach of Contract Basics
There are four situations that constitute breach of contract. Your options for resolving the issue depend of the type of breach. This is a brief overview of the breaches you may encounter:
- Material Breach – This situation occurs when one side of the transaction is not fulfilled as described in the contract. For example, failure to pay for goods or services as promised is a material breach.
- Fundamental Breach – A fundamental breach goes one step farther than a material breach. Not only does one party neglect their responsibilities under the contract, but there is a question as to whether the party ever intended to fulfill the terms of the contract at all.
- Anticipatory Breach – As suggested by the name, an anticipatory breach is a breach that has not yet occurred, but it becomes clear that one side cannot or will not follow through with the terms of the contract as agreed. Though the deadline for delivery is still in the future, the contract can be terminated and the party that failed to deliver as promised can be sued for damages.
- Minor Breach – When contracts set the expectation that goods or services will be provided in exchange for agreed upon compensation, there is also an expectation that goods or services will offer a certain level of quality. In a situation where a minor breach of contract occurs, both parties met their obligations, but the end results were not as expected. In this case, the purchaser may sue to compel the first party to correct the product or pay to have it corrected.
Resolving a Breach
Once you have determined that a breach of contract occurred, the next step is to validate that the terms of the contract are enforceable. At this point, it is wise to enlist the help of a specialized contract lawyer, such as the experts at The Mellor Law Firm.Your attorney will examine each aspect of the contract to ensure that it is legally sound. You can prepare for this review by collecting all relevant documentation. For example, proof of contract, evidence of breach of contract, an explanation of which terms you believe were broken and how, and the amount of loss you sustained, if any.Typically, your attorney will recommend drafting and sending a before action breach of contract letter to the other party. In many cases, this is enough to persuade the other party to fulfill the terms of the contract as agreed. If you do not receive a satisfactory response to the letter, it is time to move forward with additional action.Filing a lawsuit to resolve a breach of contract gives you an opportunity to collect compensation for damages you incurred as a result of the issue or to collect the promised goods and services. You may also choose to try mediation or arbitration to resolve the issues without a court hearing.These are the most common methods of resolving financial claims so that you are made whole again:
- Compensatory Damages – The party in breach of contract reimburses you for costs related to the breach, in addition to compensating you for any losses you incurred.
- Consequential and Incidental Damages – When the contract specifies the amount and type of losses that could be incurred in case of a breach, you may be awarded the amount listed in the document as consequential and incidental damages.
- Liquidated Damages – This amount may also be spelled out in the original contract, in which case there is no need to debate the amount of your loss. You can be awarded the specified sum.
- Punitive Damages – Though unusual, there are cases in which the party in breach of the contract is assessed punitive damages. This is extra compensation intended to punish the defendant for particularly egregious behavior.
Of course, in addition to financial losses, you must deal with the outstanding contract itself. Some of the most common remedies you will see include the following,:
- Specific Performance – Both parties are ordered by the court to comply with the terms of the original agreement.
- Rescission – The contract is cancelled by court order, and any funds or goods that were already exchanged are returned. Through rescission, everything is restored as if the contract never existed.
- Reformation – The court orders the contract to be rewritten according to the intentions of both parties when they agreed to the terms.
The Mellor Law Firm as a top choice for expert Contract Dispute Attorneys. You will benefit from a combined 40 years of experience in matters related to business law and contracts. Consultations are available over the phone or in-person. Schedule an appointment online or by phone at 951-221-4330.