Understanding Breach of Contract Claims

Contract and pen

Elements Necessary to Prove a Breach of Contract

Breach of contract occurs when one party to a valid contract breaks its promise to the other party or parties. Most contracts end when both parties have fulfilled their obligations. But sometimes one party does not meet its obligations under the terms of the contract. When this occurs, that party is said to be in breach of the contract.

To have a claim for breach of contract, there must be a valid contract, a party who violated the terms of the contract, and another party that was damaged as a result.  

A valid contract can be written or oral and must include an offer, acceptance, and consideration, or the exchange of something of value.

What Is a Breach of Contract?

Breach of contract occurs when one party to the contract does not do what they said they would do. Think of a breach of contract like a broken promise. Examples of a breach of contract include:

  • Failing to finish a job
  • Failing to provide agreed-upon goods or services
  • Failure to pay on time
  • Providing goods are services that are inferior

Breach of contract lawsuits are one of the most common claims filed in U.S. courts.   Judges can offer various remedies to compensate someone for a broken contract. These remedies are not intended to punish the party that broke the contract; rather, they return the injured party to the position they were in before the breach occurred.

Types of Breach of Contract Claims

A contract can be breached in whole or in part. A partial breach occurs when some, but not all, of the terms of the contract were violated. For example, a homeowner might request that their house be painted in Beige, but the painter used Brown. The house was painted, but the color was incorrect. The homeowner has a claim for a partial breach of contract in that the painter did not use the color specified in the contract.

A material breach of contract occurs when the party that violates the agreement does so in a way that removes the value of the contract, such as if the painter simply failed to paint the house. In this case, the homeowner can sue for damages, would not be required to pay for the painting, and would be owed any deposit that was paid.  In some circumstances whether a breach is material is determined by whether there has been substantial performance.  For example, if there was a contract not just to paint a house, but instead to build and complete an entire house, and the constructed house was so defective that it could not be repaired without taking down and reconstructing a substantial portion of the whole house, the contractor will be deemed not to have substantially completed the house, and despite having provide some work, will be not be allowed any recovery.    

A party can also claim anticipatory breach of contract if they suspect that the other party will not meet its obligations because they did something which shows their intention not to perform under the terms of the contract. An anticipatory breach of contract might occur, for example, if a homeowner paid a deposit to have the house painted but the painter stopped responding to emails, texts, or phone calls. Proving anticipatory breach of contract can be very difficult.

To have a valid claim for breach of contract, the party claiming that the contract was breached generally must have fulfilled its obligations under the contract. In the above example, the homeowner must have made payment for the house painting and must have fulfilled any other requirements under the terms of the contract, such as telling the painter the color she wished the house to be painted.

Before filing a lawsuit, the party who is claiming the contract was breached generally must notify the other party, preferably in writing, that the other breached the contract.  In some cases, especially in cases involving a contractor breaching a warranty, the property owner must give the contractor the opportunity to cure the defective work.

What Can You Do If a Contract Has Been Breached?

If a contract has been breached, the breaching party generally must take immediate steps to fix the situation. They may be able to correct their mistake before the other party is aware of the breach, or before the other party can file a lawsuit.

Many contracts contain a section that addresses what to do in the event of a breach. There may be a clause that calls for the termination of the contract or that says the parties have a certain amount of time to fix it. 

If the breach cannot be quickly remedied, the breaching party should speak to the non-breaching party. This demonstrates a good faith effort to resolve the dispute, and the parties may be able to resolve the breach without the need to file a lawsuit.

The non-breaching party should, if at all possible, give the breaching party the opportunity to fix the mistake. The breaching party may be able to fix the mistake in a way that still meets the non-breaching party’s needs so both parties can come to a resolution and avoid legal action. However, the non-breaching party is not required to agree to a change in the contract that does not sufficiently benefit them for damages caused by the breach.

If attempts to resolve the breach are unsuccessful, it may be wise to enlist the assistance of an experienced breach of contract attorney

Defenses to Breach of Contract Claims

As in any lawsuit, the defendant has a right to offer proof for why the alleged breach of contract did not happen or should be excused. Common defenses to claims for breach of contract include:

  • The defendant claims that the contract is invalid because the plaintiff made a false statement or knowingly concealed a material term of the contract.
  • A contract is not valid if a party was forced to agree to the contract through the use of force or the threat of force.
  • If one party did not have the capacity or competence necessary to agree to the contract, such as if they were a minor, were mentally incapable, or did not have the authority to bind an organization to a contract, the contract might be invalid.
  • Undue Influence. When one party has power or advantage over the other party and uses it to force the other to agree to the contract.
  • If the contract is for something illegal, such as the sale of drugs or to commit murder, the contract is not enforceable.
  • If both parties made a mistake about the contract it can be enough to invalidate a contract.
  • Unclean Hands. If both parties to the contract did something that led to the contract being breached, the party claiming the breach may be unable to collect damages.
  • Statute of Limitations. All cases have deadlines before which they must be filed. If the defendant can show that the plaintiff’s claim was filed after this deadline, the case must be thrown out of court. In North Dakota and Minnesota, the statute of limitations to file a breach of contract claim is generally six years, but there are shorter statutes of limitations that may apply depending on the nature of the contract. As such, you should also immediately contact an attorney if you believe you may have a breach of contract claim.
  • Failure to Mitigate Damages. The non-breaching party has a duty to attempt to mitigate their damages. If the non-breaching party does not take reasonable steps to reduce their losses after the breach of a contract, the defendant can ask the court to reduce the plaintiff’s damages by an amount that could have been avoided.

Remedies for Breach of Contract

If a plaintiff can prove breach of contract they are entitled to a remedy. This can include damages (an amount of money to compensate the plaintiff for the loss suffered), an injunction (a court order that requires one party to stop doing something that damages the other party), and rescission (cancellation of the contract.

How Can a Lawyer Help?

If you believe someone breached a contract with you or your business, or if you’ve been accused of breaching a contract but believe you have a defense, it is important to contact a lawyer who has experience handling breach of contract claims. Details that you may think are minor or insignificant can have a profound effect on the outcome of a case. A lawyer will be able to help point out these important details and represent you in court.

A breach of contract lawyer can help by reviewing, editing, and negotiating the terms of the contract (indeed in most cases you should talk to a lawyer before signing a contract in hopes of avoiding issues that might lead to a breach). If you need to file a lawsuit, have been sued, or believe you will be sued, you should hire an attorney as soon as possible. An attorney will be able to analyze the terms of the contract, assess any available defenses available, and provide assistance in negotiating a resolution or in mediation, arbitration, or litigation.

Fremstad Law — Moving Your Forward in Breach of Contract Claims

At Fremstad Law our lawyers have handled countless breach of contract claims. North Dakota and Minnesota lawyers  Joel Fremstad, James Teigland, Mark Western, Brandt Doerr, and Nick Thornton are here to help move you forward. Contact us today by calling (701) 478-7620.