05 Nov Do I Have a Case for Breach of Contract? Common Questions About Litigation Q&A Part I

In its next series of blogs, Edwards Law will address common questions that clients often have concerning their business legal disputes.   Today Edward Law will address the most common issues that small business owners face – breach of contract.  Do you know whether you have a viable breach of contract case?

Breach of Contract –Common Questions

1. Q: The other party to my contract tells me that she is not going to meet her obligations under the contract, before the time for her performance.  Can I terminate the contract?

A:  Yes.  This is called “anticipatory breach”, and allows you to safely exit the contract.  The other party’s decision not to perform under the contract must be clear, unequivocal, and unambiguous.  If this happens, you can treat the contract as ended so far as further performance is concerned.  You can also in this circumstance maintain a lawsuit at once for the damages caused by the anticipatory breach.

2. Q: I paid as agreed under the contract but the other party did not provide the software/support/product it promised under the agreement.  Can I sue for breach?

A: Yes.  This is called failure to “substantially perform”.  Failure of the other party to provide substantial performance under a contract is a basis to sue for breach of contract.

3. Q: I adequately provided my client with the requested services, but my client has not paid me according to the terms of our contract, can I sue them for failure to pay?

A: Yes.  This is a prime case for breach of contract.  A breach of contract claim requires you to plead and prove four elements: (1) formation of a valid contract; (2) your performance or excuse of performance under the contract; (3) material breach by the defendant; and (4) damages.   Typically a court will construe the contract based on the written language and will enforce it as written.

4. Q: My vendor did not breach the written terms of our contract, but he is not dealing with us fairly. The vendor told us that they would be the end user of our product, but we found out that the vendor was purchasing inflated quantities of our product for resale.  We gave them our best price and now they are taking advantage of it without our authority.

A: If a party does not breach the express terms of the contract, they may still breach the covenant of good faith and fair dealing.  This occurs when there is a duty imposed on the party, either by statute or the contract.  All contracts impose upon the parties an implied covenant of good faith and fair dealing, which prohibits arbitrary or unfair acts by one party that work to the disadvantage of the other.

5. Q: I am certain that the other party to my contract breached the agreement, but my contract does not say how I recover under the contract for my damages.

A: When parties to a contract prescribe a remedy, a presumption arguably exists that the parties intended the remedy to be exclusive.  But when the contract is silent as to a remedy for breach, the court will not assume a remedy.  You will have to prove it.

6. Q: The other party to my contract outright lied to me in order to get me to sign it. Can I get out of the contract?

A:  Yes.  You may have a claim for intentional misrepresentation.  To prove this claim, you must prove the defendant made a false representation to you, with knowledge or belief that the representation was false or without a sufficient basis for making the representation.   Further, you must establish that the defendant intended to induce you to act or refrain from acting on the representation, and that you justifiably relied on the representation. Finally, you must establish that you were damaged as a result of your reliance.

7. Q: My vendor failed to tell me about a key fact about his product. Had I known about it, I would not have entered into a contract with him. Can I get out of the contract?

A: Yes.  You might have a clam for fraudulent concealment.  A defendant may be found liable for misrepresentation even when the defendant does not make an express misrepresentation, but instead makes a representation which is misleading because it partially suppresses or conceals information.  The misrepresentation does not have to be expressly made.

8. Q: My new supplier changed the terms of our contract without telling me and I signed the contract. I don’t agree with the secretly-revised terms and I want out of the contract.  Can I cancel the contract?

A: Yes.  Execution of a contract induced by fraud is voidable.  If the execution of a contract is induced by fraud, the contract is voidable and you can seek to “rescind” the contract so there is no longer any contract to enforce.  Rescission is an equitable remedy seeking to place the parties in the positions they were in before the execution of the contract.  However a claim of fraud must be supported by clear and convincing evidence.  The focus of the inquiry is whether the party seeking rescission was deceived in fact by the misrepresentation which the other party made knowingly and with the intention that it be relied upon.

9. Q: My vendor refuses to deliver any more shipments because his costs have gone up and it’s no longer profitable for him to meet his obligations under the contract. Can I stop paying and get out of the contract?

A: Maybe.  If the other party to the contract prevented your performance of the contract, the court might consider the contract repudiated.  It is a principle of fundamental justice that if a promisor is himself the cause of the failure of performance, either of an obligation due him or of a condition upon which his own liability depends, he cannot take advantage of the failure. The term ‘prevented from performing’ does not mean there must be physical prevention, but that any acts, conduct, or declarations of the party, evincing a clear intention to repudiate the contract, and to treat it as no longer binding, is a legal prevention of performance by the other party.  When the other party has “renounced” the contract and no longer considers himself bound by it, there is, in legal effect, a prevention of performance by the other party, and you need not perform after such refusal and will be entitled to any lost profits from the other party’s failure to perform.

If you still have a question as to whether you have a breach of contract claim, call Edwards Law today to schedule a complimentary initial 20-minute consultation about your case.