Broken Promises: Understanding and Addressing Breach of Contract Claims | Articles

Contracts are the backbone of business, setting expectations and obligations for the parties involved. But when one party fails to meet their contractual obligations, it can lead to significant disputes and financial consequences. These disputes, known as breach of contract claims, are among the most common legal issues businesses and individuals face.

This article explores the basics of breach of contract claims, the key elements required to prove a breach, and the remedies available to resolve these disputes.

What Is a Breach of Contract?

A breach of contract occurs when one party fails to fulfill their duties as specified in a legally binding agreement. This failure can take many forms, including:

Non-Performance: A party doesn’t perform at all.
Delayed Performance: A party performs but not within the agreed timeframe.
Partial Performance: A party performs some but not all obligations.
Substandard Performance: A party performs, but not to the quality or standards required.

For example, if a supplier agrees to deliver 1,000 widgets by a certain date but delivers only 800 after the deadline, that could constitute a breach.

Key Elements of a Breach of Contract Claim

To succeed in a breach of contract claim, the plaintiff typically must prove the following elements:

Existence of a Valid Contract:
There must be a valid agreement between the parties, whether written, oral (in some cases), or implied.
Plaintiff’s Performance or Excuse for Non-Performance:
The plaintiff must demonstrate that they fulfilled their obligations under the contract or had a valid reason for not performing.
Defendant’s Breach:
The defendant failed to meet their contractual obligations. This could involve failing to deliver goods, provide services, or pay money owed.
Damages Resulting from the Breach:
The plaintiff suffered losses directly caused by the defendant’s failure to perform.

A Relatable Example

John runs a small catering company and enters into a contract with a local venue to provide food and beverages for a wedding. The contract specifies that the venue will provide kitchen space and staff to assist John. On the day of the event, the venue informs John that the kitchen is unavailable, forcing him to rent equipment and hire extra staff at the last minute.

John files a breach of contract claim, arguing that the venue’s failure to provide the agreed-upon kitchen space caused him financial harm.

Remedies for Breach of Contract

The remedies for breach of contract depend on the severity of the breach and the harm caused. Common remedies include:

Monetary Damages:
- Compensatory Damages: Reimburse the non-breaching party for losses directly caused by the breach.
- Consequential Damages: Cover additional losses that are foreseeable but not directly caused by the breach (e.g., lost profits).
Specific Performance:
- The court orders the breaching party to fulfill their contractual obligations. This remedy is common in cases involving unique goods or real estate.
Rescission:
- The contract is canceled, and both parties are restored to their pre-contract positions.
Reformation:
- The court modifies the terms of the contract to better reflect the parties’ original intent.
Liquidated Damages:
- Pre-agreed damages specified in the contract that apply in the event of a breach.

Defenses to Breach of Contract Claims

The breaching party may argue defenses to avoid liability, such as:

Lack of a Valid Contract: The agreement wasn’t legally enforceable.
Performance Was Impossible or Commercially Impracticable: Unforeseeable circumstances made performance impossible or commercially impracticable.
Plaintiff’s Breach: The other party didn’t fulfill their obligations, excusing the breach.
Contract Was Illegal or Unenforceable: The agreement violated public policy or lacked essential terms.

For example, if the venue in the earlier scenario argues that a fire rendered the kitchen unusable, they may claim impossibility of performance as a defense.

Best Practices to Avoid Breach of Contract Disputes

Use Clear Contracts: Ensure your contracts are detailed, covering timelines, deliverables, payment terms, and contingencies.
Communicate Early and Often: Address potential issues before they escalate into breaches.
Document Everything: Keep written records of communications, agreements, and any changes to the contract.
Include Dispute Resolution Clauses: Add provisions for mediation or arbitration to handle disputes more efficiently.

Final Thoughts

Breach of contract claims can be costly and time-consuming, but they’re often avoidable with well-drafted agreements and proactive communication. If you’re dealing with a breach—or worried about one happening—consulting an attorney can help you understand your rights, obligations, and remedies.

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Mark Adams is a trial lawyer at JMBM who focuses his practice on business litigation including contracts, products liability, corporate and partnership disputes, and hospitality litigation. He has tried numerous cases in state courts, federal courts, and in domestic and international arbitrations. Contact Mark at MarkAdams@jmbm.com or (949) 623-7230.

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