THE OTHER SIDE BREACHED OUR CONTRACT! NOW WHAT?

First, you need to have an enforceable contract.?

Generally, the elements necessary to create an enforceable contract are (1) an offer (I will sell you a widget for $1.00), (2) acceptance (I agree to pay you $1.00 for the widget), (3) consideration (the exchange of the widget and the $1.00), and (4) a mutual meeting of the minds (the parties are agreeing to the same thing.) To be enforceable, the contracting parties’ obligations must be reasonably certain, and the parties must have agreed on the material and necessary details of the agreement.

Also generally, to bring a breach of contract claim, a plaintiff (the injured party) must prove (1) the existence of a contract, including its essential terms; (2) a breach of a duty imposed by the contract by the defendant (the breaching party); and (3) damages caused to the plaintiff by the defendant’s breach.

?When do I have to file suit?

In Pennsylvania, the statute of limitations for filing suit for a breach of contract is 4 years. You should confirm the duration of the statute in other states – they are not all the same.? The statute of limitations begins to run at the time the cause of action accrues. Under Pennsylvania law, a breach of contract claim accrues at the time of the breach. If you do not resolve your claim or file suit within the statute of limitations, you will be barred from filing suit.

In some instances, the parties' agreement can reduce the period of the statute of limitations. This is often found in insurance contracts.? Under the Uniform Commercial Code, the parties case reduce the statute in a contract for the sale of goods to no less than 1 year.? The parties cannot extend the limitations period beyond 4 years.

?What can I recover because of the breach??

?There are several types of damages that may be recoverable for a breach of contract. The two primary types of relief are monetary damages and equitable remedies.

Monetary Damages include:

?(1) Compensatory or actual damages – these are intended to compensate the injured party for all losses sustained as a result of a breach of contract and to place the nonbreaching party in the position it would have been in but for the breach. The two kinds of compensatory damages are direct damages (sometimes referred to as general damages) and consequential damages.

?A.??? Direct Damages - the law presumes these damages will be the immediate injury resulting from a breach. They typically include, specific, economic losses, and noneconomic losses such as pain and suffering and emotional distress. However, it is very hard to recover for pain and suffering and emotional distress in a breach of contract suit.

?B.??? Consequential Damages - these damages are intended to compensate an injured party for indirect damages sustained as a result of the breach.

?(2)? Incidental Damages – these are the actual costs and expenses incurred by the nonbreaching party to avoid other direct and consequential damages and losses arising out of the breach of contract.

?(3) Liquidated Damages – these are specifically agreed to by the parties in their contract before a breach has occurred. Such damages are only available where, at the time of contracting, the actual damages that would result from a breach would be difficult or impossible to calculate with any degree of certainty. A liquidated damages clause will only be enforced if the amount of the liquidated damages represents a reasonable and fair attempt by the parties to calculate future damages in the event of a breach.? Such a provision will not be enforced if it is deemed to be a penalty.

?Equitable Remedies Include:

(1)?? Specific Performance – this involves obtaining a court order requiring a defendant to perform its contractual duties, and may be awarded when other available remedies are either too speculative or insufficient to adequately compensate the plaintiff.

(2)?? ?Reformation – this is when a court order rewrites an incorrectly or improperly drafted agreement so that it accurately and fairly reflects the intent of the parties. Such relief is most commonly granted in cases where the parties' writing mistakenly failed to properly memorialize their agreed-upon intentions.

(3)?? Rescission – this means cancelling a contract to restore the parties to their initial status, which can be accomplished by the mutual agreement of the contracting parties or pursuant to a court order. Upon rescission, the subject agreement is terminated in its entirety, as if the contract never existed.

(4)?? Injunctive Relief - an injunction is a court order requiring a party to take or refrain from taking a specific action. An injunction can be permanent or temporary.

This article only scratches the surface of a breach of contract claim.? If you believe someone has breached a contract with you or your company, you should contact an attorney licensed in your state for a more detailed analysis and discussion of your case.

Best of luck!

?

?

?

?