The parties entering into a contract always do so with the best of intentions. At the time a deal is struck, both sides want the benefit of the bargain. But shifting priorities or factors beyond the parties’ control often mean a contract cannot be executed as planned.
When a breach occurs, The Law Offices of Andrew Dressel LLC can help find a path forward.
We are a solutions-focused law firm that works with New Jersey businesses, investors, and individuals who are dealing with the fallout from a breached contract, or defending against allegations that they caused a breach. When we are hired to represent a party in a dispute over an alleged breach, we focus on finding a way for our client to focus on what’s next instead of dwelling on what could have been.
What is a Breach of Contract?
A contract is breached when its terms are not met. Whatever the contract said would happen—the bargained-for exchange—either will not or cannot occur as planned.
It is often obvious that one party or the other has fallen short of their contractual obligations, or flat-out refused to carry them out. Other times aƒ dispute may arise because the parties don’t have a shared understanding of the contract terms. External factors like delays, financial problems, or other unexpected events outside of anyone’s control can also cause a breach.
When Can I Sue for Breach of Contract?
If the other party to a contract fails to live up to their obligations, filing a lawsuit against them may seem like the logical next step. However, there are several factors to consider before heading to the courthouse. The Law Offices of Andrew Dressel LLC guides potential clients through this analysis when we are evaluating whether to take a case.
What makes a contract valid?
First, it is necessary to prove a contract exists before you can enforce your contractual rights. A contract does not exist just because two parties signed the same piece of paper. A valid contract must include:
- A meeting of the minds: The parties to the contract must have wanted to enter into a contractual relationship, and have agreed on the basic terms.
- Offer and acceptance: One party must have made an offer that the other party accepted.
- Consideration: The parties must have exchanged something of value with one another. Each party must benefit from the transaction.
- Performance: Whatever was agreed to in the contract must be done according to the terms of the contract.
- Is it in writing: Some contracts must be in writing (not just verbal agreements) in order to be enforceable.
- Does it violate public policy: In order to protect the public, some transactions are illegal.
Determining if one of these factors invalidates an alleged contract is a very fact-specific analysis. It is difficult to know whether a contract is valid without carefully reading it and learning more about the circumstances surrounding its negotiation and execution.
The courts dislike unclean hands
A party seeking to enforce a broken contract must have performed their contractual obligations. The courts don’t want to referee disputes where both sides are in the wrong, but insist on pointing the finger at the other party. This is known as the doctrine of unclean hands.
The courts dislike unclean hands
A party seeking to enforce a broken contract must have performed their contractual obligations. The courts don’t want to referee disputes where both sides are in the wrong, but insist on pointing the finger at the other party. This is known as the doctrine of unclean hands.
The clock is ticking
Many contracts include provisions explaining what rights and responsibilities the non-breaching party has if the contract is broken. One of the clauses in this section typically limits the amount of time the non-breaching party has to attempt to enforce the contract. Once the time specified in the contract passes, the aggrieved party is generally unable to litigate a dispute over the contract.
If the contract does not include a deadline for settling disputes, state law will limit the amount of time available to the parties. This is called the statute of limitations, and it varies from case to case based on the facts of the case.
Is there a better way to resolve the dispute?
In some situations, negotiating a new agreement or canceling the contract and walking away is better for both parties. Rather than insisting on having their day in court, non-breaching parties can often benefit by taking a step back and figuring out if there is a way to win the dispute at hand without filing a lawsuit.
Even if they would prefer to file a lawsuit some non-breaching parties are prevented from doing so by the contract itself. If the contract has a section outlining the parties’ preferences should a dispute arise, litigation may be off the table. Many parties opt for arbitration when crafting a contract in an effort to minimize legal costs and keep private business out of the public eye.
The Law Offices of Andrew Dressel LLC’s knowledgeable attorneys are experienced at negotiation and arbitration as well as litigation. We make sure our clients are aware of all of their options so the case can be resolved on their terms.
Is there a better way to resolve the dispute?
In some situations, negotiating a new agreement or canceling the contract and walking away is better for both parties. Rather than insisting on having their day in court, non-breaching parties can often benefit by taking a step back and figuring out if there is a way to win the dispute at hand without filing a lawsuit.
Even if they would prefer to file a lawsuit some non-breaching parties are prevented from doing so by the contract itself. If the contract has a section outlining the parties’ preferences should a dispute arise, litigation may be off the table. Many parties opt for arbitration when crafting a contract in an effort to minimize legal costs and keep private business out of the public eye.
The Law Offices of Andrew Dressel LLC’s knowledgeable attorneys are experienced at negotiation and arbitration as well as litigation. We make sure our clients are aware of all of their options so the case can be resolved on their terms.
Different Types of Contract Breaches Call for Different Remedies
Whether a non-breaching party can sue for breach of contract is one question. Whether they want to do so is another. The answer to this second question often depends on the remedies available. And the remedies available vary based on the severity of the breach, the timing of the breach, and the parties’ actions.
Anticipatory breach of contract vs. actual breach of contract
When one party notifies the other—either explicitly or by their actions—that they won’t be able to fulfill their contractual obligations, an anticipatory breach has occurred. At this early stage, the parties may be able to negotiate a new agreement or cancel the contract and walk away without suffering a substantial loss. If the non-breaching party wants to take legal action, they may be able to seek compensation for any money they have spent preparing for the contract to be executed.
An actual breach of contract occurs when one party fails to fulfill their contractual obligations. There is no longer any question about the parties’ ability to perform, the breach has occurred.
Minor vs. material breach of contract
There are two types of actual contract breaches: minor and material.
A minor breach of contract, which is sometimes referred to as a partial or immaterial breach of contract, is an error, oversight, or mistake that could be fixed with additional time and effort. For example, one party orders a new machine, and it arrives late or with a few parts missing.
The non-breaching party can take legal action if they can prove they suffered some sort of financial loss as a result of the breach. The court can award compensatory damages that would put the non-breaching party in the place they would have been if no breach had occurred. In rare cases, the court may order the breaching party to take action to ensure the terms of the contract are fulfilled. This is known as specific performance.
A material breach of contract is much more serious than a minor breach of contract. A material breach occurs when the breaching party’s action, inaction, or fraud defeats the purpose of making the contract. Unlike the remedies available for a minor breach of contract, there is no way to rectify a material breach. The contract is totally broken and useless.
When a material breach has occurred, the non-breaching party can ask the court to award compensatory damages that would put them in the position they would have been in if the contract had been fulfilled.
Minor vs. material breach of contract
There are two types of actual contract breaches: minor and material.
A minor breach of contract, which is sometimes referred to as a partial or immaterial breach of contract, is an error, oversight, or mistake that could be fixed with additional time and effort. For example, one party orders a new machine, and it arrives late or with a few parts missing.
The non-breaching party can take legal action if they can prove they suffered some sort of financial loss as a result of the breach. The court can award compensatory damages that would put the non-breaching party in the place they would have been if no breach had occurred. In rare cases, the court may order the breaching party to take action to ensure the terms of the contract are fulfilled. This is known as specific performance.
A material breach of contract is much more serious than a minor breach of contract. A material breach occurs when the breaching party’s action, inaction, or fraud defeats the purpose of making the contract. Unlike the remedies available for a minor breach of contract, there is no way to rectify a material breach. The contract is totally broken and useless.
When a material breach has occurred, the non-breaching party can ask the court to award compensatory damages that would put them in the position they would have been in if the contract had been fulfilled.
Liquidated damages
Parties wishing to contract around the above remedies can do so by including a liquidated damages provision in any contract they sign. These provisions specify exactly what each party owes the other should a breach of contract occur. These provisions can reduce uncertainty and make resolving breach of contract disputes very straightforward.
Speak with a Breach of Contract Attorney
The Law Offices of Andrew Dressel LLC partner Andrew Dressel has become the go-to counsel for large corporations, family-owned businesses, startups, and individuals who have been burned by a breach of contract.
We are a business-minded law firm with extensive experience litigating everything from simple breach of contract claims to multi-million dollar commercial disputes. Our team prides itself on achieving successful outcomes for our clients.
Contract law is complex, and each case is different from the next. If you have questions or concerns about a contract or breach, we urge you to contact us so we can get an overview of your specific situation and advise you appropriately. Please contact us today to schedule a meeting.
Breach of Contract FAQs
It depends on what you mean by “comply.” Courts will sometimes order breaching parties to complete the tasks they agreed to when they signed on the dotted line. This remedy is formally known as specific performance, and it is relatively rare.
Courts are much more likely to order a breaching party to pay damages than complete a contractually required task. Those damages are tied to the terms of the contract and the actions of the parties to the contract. The court is effectively enforcing a contract when it awards damages.
The amount of money a non-breaching party can seek depends on the amount of harm they have suffered. When awarding monetary damages, the courts try to put parties in the position they would have been in if a breach had not occurred.
Most contracts go into effect as soon as they are signed. If there is a grace period where you can change your mind about entering into an agreement with the other party, it will typically say so in the contract itself. Most of the time, backing out of a contract is considered breaching the contract and you will be liable for damages.