The Elements of a Breach of Contract
To understand the elements of a breach of contract, we first need to understand what a contract actually is. In its most basic sense, a contract is an agreement to do or not to do a certain thing. A sale of goods contract, as discussed, requires one firm to supply goods to another firm. A services contract requires one party to provide professional services to another. A non-disclosure agreement (NDA), to use one example, requires the agreeing party not to do something — in this case, not to disclose proprietary information.
Contracts can be "express" by being written up and signed by all, or they can be "oral" — like a handshake agreement — or implied through the mutual conduct of both parties over time. An express written contract is obviously the most solid type of evidence if a breach case goes to court. Oral and implied contracts can be challenged as being misinterpreted or even non-existent.
The four elements of proving a breach of contract involve showing:
- The existence of a contract between plaintiff and defendant;
- The plaintiff performed as specified or was excused for non-performance;
- The defendant failed to perform as required; and
- The plaintiff suffered damages arising from the defendant’s failure to perform.
Common Defenses to a Breach of Contract
Imagine, for example, that you feel your business has suffered a material breach because you lost sales and revenue when a contracted supplier failed to deliver goods on time. You decide your case meets the four standards of a breach described above, so you choose to file a lawsuit. What will the alleged breaching party do to counter your lawsuit?
They will likely attempt to show there was no contract, or if a contract existed, that it was ambiguous and unclear in its terms. If the contract is oral or implied, the defendant can challenge the plaintiff as to the mere existence of the contract. “I never agreed to that” could be alleged, or “Sure, we supplied goods from time to time, but we never agreed to a long-term arrangement.”
If the contract is indeed in writing, the defense can challenge the language over clarity and even meaning. If the defendant is required to supply 200 widgets “monthly” to another firm — which then modifies and resells them — what happens if the supplier makes two deliveries in five weeks but then misses the next five weeks? Were the terms of the contract met?
Other defenses, even if the contract is "express", can be that the defendant was fraudulently induced into signing the contract. Or perhaps they will argue that at the time of signing the contract, they lacked the capacity to do so. Another line of defense is that the contract was unconscionable in that it awarded too much power and authority to one party over the other. Any of these defenses aim to invalidate the agreement so that the defendant can escape liability in their failure to uphold the terms of the agreement.
Contract Dispute Resolution Options
Luckily, a breach of contract or any other form of contract dispute does not necessarily need to end up in court. Negotiations between the two parties should always be the first step toward resolution before embarking on a costly and time-consuming case in court. If negotiations stall or fail, you can attempt to work with a mediator or even agree to binding arbitration.
A court case should always be the last resort, given the resources (financial and otherwise) you will have to devote toward it. Litigation in court can take you away from the day-to-day management and oversight of your business, which can always have negative effects. This is not to say that you should never sue, but that it’s better to explore all of your other options first.
Work with Experienced Contract Law Attorneys
At the end of the day, if a dispute is minor and the two parties can work it out without involving extensive legal procedure, that’s always the best route. But if emotions and tempers flare over a significant issue, it’s time to rely on solid legal counsel.
An experienced contract dispute attorney can help you negotiate and, if necessary, set in motion other options, such as mediation or arbitration. An experienced attorney will also be able to examine the option of a lawsuit by reviewing the contract and the details of the alleged breach. Regardless of the circumstances that led to your contract dispute, don’t face this challenge on your own.
The contract dispute attorneys at COFFYLAW, LLC have decades of experience working with individuals and businesses in New York, New Jersey, and across the United States to resolve disputes as peacefully and efficiently as possible. If you’re facing a contract dispute, don’t wait. Call or reach out to COFFYLAW, LLC today to schedule your own one-on-one consultation.