Key Considerations In Breach of Contract Cases

In business, contracts form the backbone of most transactions and partnerships. When a party fails to fulfill their obligations under a contract, a breach occurs, potentially leading to legal disputes. Understanding the key considerations in breach of contract cases can help businesses and individuals navigate these situations more effectively.

What Is A Breach of Contract?

A breach of contract occurs when one party fails to perform as specified in an agreement. Breaches can be categorized into two main types: material and minor. A material breach is a significant failure that undermines the contract’s core purpose, while a minor breach involves a less critical aspect that doesn't substantially affect the contract's overall value.

For example, if a supplier fails to deliver goods entirely, it’s likely a material breach. However, if the supplier delivers the goods late but they still meet the required standards, it may be considered a minor breach.

The Major Elements of A Contract

For a breach of contract case to be valid, the contract itself must be enforceable. This requires the presence of four major elements: offer, acceptance, consideration, and mutual intent. Offer and acceptance demonstrate the mutual agreement between the parties, while consideration refers to something of value exchanged between them.

Finally, mutual intent ensures that both parties intended to enter a legally binding agreement. Without these elements, a contract may not hold up in court, making it difficult to claim a breach.

Identifying the Type of Breach

Determining the type of breach is the key to assessing the appropriate legal remedies. As mentioned, a material breach can justify terminating the contract and seeking damages, while a minor breach may only entitle the non-breaching party to damages.

Another type to consider is an anticipatory breach, where one party indicates they will not fulfill their contractual obligations before the performance is due. In such cases, the non-breaching party can take legal action immediately, even before the breach occurs. But you have to be certain that the other side has materially breached before you terminate, otherwise your termination will be the first breach of the contract.

Determining who Breached First

Who is the first party in breach is one of the most hotly litigated aspects of a breach of contract case.? This is because when a breach occurs, the non-breaching party is generally relieved of its obligations to perform under the contract.? However, just like with anticipatory breach, you better be confident that the opposing party has actually breached.? Otherwise you will be the party in breach by not performing.

Assessing Legal Damages and Remedies

When a breach occurs, the injured party is typically entitled to remedies, most commonly in the form of damages. These can be compensatory (to cover direct losses), nominal (for breaches with no substantial harm), liquidated (pre-agreed amounts specified in the contract), consequential (damages that are a further consequence of the breach by not direct), and incidental (such as lost profits).? Some states allow punitive damages to punch the other side, but they are not allowed in Michigan and rarely awarded in Florida. Also, some contracts have attorney fee and cost shifting provisions for the party that prevails.

In some cases, equitable remedies such as specific performance (forcing the breaching party to fulfill their obligations) or injunctions (preventing or requiring certain actions) may be appropriate. In order to accurately assess these options and calculate damages to ensure fair compensation, seek counsel from a reputable business attorney.

To learn more about the types of legal damages and remedies that can be argued for in court, read our article on Breach of Contract: Legal Actions and Remedies.

Defenses Against Breach of Contract Claims

Defending against a breach of contract claim involves proving that the breach was justified or that the contract was invalid. Common defenses include impossibility of performance (e.g., due to unforeseen events), duress, mutual mistake, prior material breach, misrepresentation, failure to provide notice and an opportunity to cure, and fraud. In addition, even if you are liable for breach of contract, there may be defenses to damages such as the other side’s failure to mitigate, the damages were not caused by the breach, or the damages are speculative or were unforeseeable.?

Additionally, Force Majeure clauses can excuse non-performance due to extraordinary events like natural disasters or the recent COVID-19 pandemic. However, these clauses must be clearly outlined in the contract. Contracts that include valid defenses can mean avoiding liability or inhibit the injured party's ability to recover losses.

The Role of Evidence In Breach of Contract Cases

Having strong evidence is how you win breach of contract cases. Documentation such as contracts, emails, invoices, and witness statements can help substantiate claims and defenses. Preserving evidence is key, as it provides the factual basis for legal arguments.

Therefore, if you would like to build a strong breach of contract case, best practices include maintaining detailed records of all communications and transactions related to the contract.

Consulting With A Business Law Attorney

Navigating breach of contract cases requires a clear understanding of the contract’s terms, the type of breach, potential remedies, and applicable defenses. If you’re uncertain about the terms of a contract or believe you have a strong breach of contract case, consult with a business law attorney. They can ensure you get the best possible representation and outcome for your case.

For expert advice on breach of contract cases and compliance with Michigan and Florida laws, consult with our experienced business law attorneys.? We also can advise you if we will take the case on a contingency fee basis.?