Contract Breach Explained
A breach of contract occurs when an agreement is violated or not performed as outlined. Breaches of contract can be classified as minor, which means there are minor deviations from the contract terms, material, meaning that the terms were grossly violated, or anticipatory, which indicates that a party expects other parties to not live up to the terms of the agreements. This is commonly referred to as anticipatory repudiation.
Depending on the severity of the breach, it can have a variety of effects on the parties involved. A minor breach will typically allow the contract to continue as planned. In contrast, a material breach, where the contract is significantly broken, will usually relieve the other party from their obligations . An anticipatory breach is taken as a breach right away, as in this case, the non-breaching party is entitled to damages, but they are usually required to wait until the time of the performance before taking further action.
Individuals who are not lawyers may wonder if it is important to talk to an attorney about their situation, or if they can go without the cost and find a resolution on their own. Although some agreements may be fairly simple and negotiation can be possible, consulting an attorney experienced with disputes over Contract Breach can save a lot of hassle, time and money in the long run. The litigation process can become extremely expensive once a lawsuit is filed and should be avoided whenever possible.
When to Hire a Contract Breach Attorney
In most cases, you should consult with a contract breach lawyer in the following three circumstances: You suspect that the other party does not plan to comply with the contracts provisions. If a party is purposely delaying performance or is constantly approaching deadlines with excuses and not results, it is time to contact a contract breach lawyer. You have given the other party every reasonable chance to perform and they simply refuse to even try. Simply sending correspondence back and forth is not enough. When a contract breach lawyer is involved, they will review your specific facts and communicate with the other party based on good faith facts and not inconsistent nonsense. The potential damages from the breach are one that you cannot overlook. Either you do not have enough "money in the pot" for litigation, or there are damages that surpass the balance in litigation. In either case, the client should contact a contract breach lawyer to analyze and determine the potentially exposed legal claims to minimize litigation expenses.
What to Look for in a Contract Breach Attorney
When you are hiring a lawyer, consider getting one that specializes in contract law for the best possible representation. A contract breach lawyer with years of experience will have a proven track record of handling contract cases. Your lawyer should have the relevant credentials and be in good standing with the professional network for contract breach lawyers. He or she should have successfully handled contract breach cases similar to yours and have experience on either side of the law. Although you want someone experienced, a true contract breach lawyer accepts that the law is ever-changing and always developing, but that your individual lawyer should be experienced enough to make the best argument for your case and help you get the desired results.
Contract Breach Remedies under the Law
Economic damages may be awarded for the losses that you actually can prove resulted from the breach. However, contracts will sometimes provide other sorts of relief instead of or in addition to money damages. Attorneys will have the experience to understand the different-and often better-forms of relief you may receive.
Specific performance is a remedy in which a court orders a party to perform the obligations under a contract. This is most commonly used in real property transactions. If someone was supposed to sell their house to you and then reneged, you could request specific performance to force them to sell you that house. Specific performance is not available in all cases. For example, if you were supposed to do work for someone and then he decided to hire someone else, it would be impossible to force that person to continue hiring you. Attorneys will help you determine when specific performance is appropriate.
Rescission is a legal remedy whereby a contract is canceled and the parties are returned to the positions they occupied before the contract was formed. This is most commonly used in insurance disputes. A health insurance company might claim you did not have a chronic condition when you obtained insurance on that basis and then deny coverage. You would then be able to have the contract rescinded to go back to the position you occupied before the insurance contract was made. Depending on your attorney, there may be other forms of equitable relief that will be available in your case.
Regardless of the type of remedy you seek, an attorney can make a substantial difference in your ability to receive what you are entitled to.
How a Contract Breach Case Plays Out
If you are pursuing a claim for breach of contract with the help of an experienced business litigation attorney, there are a series of steps you can generally expect. Below is an overview of the typical steps in a contract breach case:
Initial Meeting with an Attorney
Many times, potential clients have strong cases, but they do not find out until later that there are legal issues that are significantly complicating their case. It is important to fully inform yourself regarding the issues that could arise in your case and to fully understand all facets of your case before you go to trial. The initial meeting you have with your attorney is an important opportunity to gathering information and discussing the issues of your case. You should bring any documents and evidence that you have relating to your case to this meeting.
Investigation
If the case cannot be settled, your attorney will continue his or her investigation into the facts of your case. This may involve interviewing witnesses and gathering additional evidence regarding your claim and your opponent’s defenses.
Filing of the Complaint
Once your case has been fully investigated, your attorney will file a complaint with the court. The complaint is the notice that the defendant is being sued and that they must respond to the lawsuit. The complaint will be served to the defendant, who has a certain amount of time to respond as specified by the law.
Discovery
If the case is not resolved, then both sides enter into the process of discovery , where they gather and exchange information about the claims and possible defenses of the other side. This will often involve the use of interrogatories, requests for admission and requests for production of documents, and sometimes even the taking of depositions. The purpose of discovery is to obtain enough information to assess the strengths and weaknesses of your claim.
Motions
After discovery is complete, your attorney will file motions for the court to rule on the law of the case. In many cases, this will be the final end of the lawsuit as it can result in the judge determining if there are any claims or defenses that do not have any merit, so as to save the parties’ time and money. If a motion is denied and whether the judge makes an order against either party, the case may proceed to trial.
Trial
If the case is not resolved in discovery or through pre-trial motions, then the case will go to trial. At this point, you should have a team of lawyers by your side, including a lawyer who can argue the law to the judge and/or jury regarding your claim. If the case is won, there will usually be post-trial motions filed with the court to have the judge grant equitable relief (i.e. an award of monetary damages) as specified by the law.
The above steps of a contract claim are general only and can be altered, changed, exchanged between different stages, omitted or contain other procedural steps entirely. The progress of your case is fully dependent on the actions of both parties as well as the procedural rules of the court.
Breach of Contract Attorney Fees and Costs
Like all professional services, hiring a lawyer comes with a price tag. In some cases, the fees are exactly what you might expect. In others, it can be hard to judge whether they are reasonable. For contract breach lawyers, this is further complicated by the long-term nature of the retainer, as issues on the case can arise well after you’ve paid a lawyer’s initial fee. To that end, there are two definite examples of fee structures when hiring a contract breach lawyer: hourly fees and contingency fees.
Hourly Fees
Most criminal lawyers operate with an hourly fee structure, charging clients a pre-agreed amount for each hour spent directly working on your case. This guarantees that you’re only paying the lawyer for work they’ve done, ensuring you don’t get presented with unexpected costs in the future. However, it is important to note that expenses can still accrue in terms of travel, research, administrative work, etc. The most common advantage of an hourly fee structure is that it’s entirely level. Hundreds of small tasks in any given case can quickly mount up in total cost. If your lawyer charges a set amount for each hour they’re spent directly handling the case, you’re guaranteed the best value for money. Freelance contractors across many industries (such as nursing or construction) operate on an hourly fee principle, and the logic is much the same: you can avoid being charged for the time taken to "think about" or "consider" a task while being charged only for directly-delegated work. Hourly fees aren’t without their disadvantages, however, and there are two main ones to consider here. First, hourly fees can rack up quite the bill by the end of your case, and they quickly add up if you don’t closely monitor your budget. Many clients are ambivalent or unaware of the fees charged for each part of their case but become far more aware when a six-figure total threatens to hit (as is common in many more serious civil cases that involve class actions, especially). Secondly, the nature of hourly fees means that a lawyer may be incentivized to milk the clock. Some unscrupulous lawyers may charge a five-minute activity such as a phone call or email reply as 15 minutes simply to secure a higher fee. As a client, you want your lawyer’s undivided attention, but if they’re more concerned with squeezing 60 minutes of work from a task that could be done in 30, you’ve suffered a direct personal cost from a fee structure intended to benefit you.
Contingency Fees
Contingency fees in contract breach lawsuits are the second main method of lawyer payment. Using this structure, a client agrees to pay the lawyer an amount (usually a percentage of the final settlement) if and when their case is successful. This means that you only have to pay a fee if your lawyer is able to win your case – and you don’t have to pay if they lose. There’s something of a moral hazard here to consider, of course; if your lawyer receives payment unless you win, there may be some added incentive to settle early or for a lesser value if it means that the lawyer will receive payment sooner. This being said, success-based payment plans do allow you greater freedom in where you’d like to take your case, as your lawyer will be more willing to take on costlier litigation and legal battles if there’s a payday waiting for them in the end. Some contingency lawyers even allow clients to forego payment if the case is particularly difficult or complex; since the lawyers in question may not receive any fees for years of work, they’re usually more motivated and dedicated to your particular case.
Contract Breach Case Examples
Real-life examples of contract breach cases are akin to a crystal ball, allowing us to glimpse the future. We can identify a potential outcome and decide if we like it or not. An employer gets a consultant on a low fixed fee per month retainer to provide a certain service. After a few months, the employer wants more services from the consultant, and is not happy with a certain action of the consultant. The employer may be required to terminate the contract on short notice. What will the employer say to the consultant? Come to my office, right away, I have something urgent I need you to do.
Will the relationship be further damaged by doing this, will it create more problems than it solves? If the client is the only client of the consultant, and the client terminates the relationship before the consulting firm’s monthly retainer ends, will the consultant be angry? Will the consultant expect two months notice for an immediate termination, or a positive reference? What compensation will the consultant seek? Will the client suffer any damages because the consultant is angry, expects money for the notice period, or seeks negative compensation?
Let’s try another scenario. Two companies agree to work together on a project, sharing the costs, sharing the profits and splitting the work in half. One company fails to do its half of the work, then becomes slow in refunding the half of the money paid for that work. The other company has an internal meeting, and requests any email communications from the failing company. A week later, the manager of the failing company calls his counterpart and suggests they fix the problems with a face-to-face meeting. After the face-to-face meeting, a new agreement is signed, but the poor performance by the failing company continues.
Another scenario, A company provides coaching and mentoring , and issues invoices monthly. A client emails twice requesting a one-hour phone call, and receives no response. The client refuses to pay, and wants to chargeback the money already paid for the service. If the client does chargeback the money paid, how will the service provider respond?
A commercial landlord rents space to an aspiring restaurant operator. They agree to hire a designer, install the improvements and add kitchen equipment without any cost to the landlord, and pay the costs out of a lump sum financing provided by the landlord. When the store opens, the landlord notices the cash register is still empty. The restaurant operator asks for a lease extension, and will pay thirty percent of the lost rent toward the extension. The landlord shrugs and says nothing.
The landlord renegotiates and gets the rent reduction down to ten percent and extends the lease. One year later, a third party approaches the landlord and offers to rent the property at two times the market rate. The landlord informs the tenant that the lease has been terminated with no further rent due. The restaurant opens in the old place, but the empty cash registers soon start to ring and the new tenant pays the higher rent.
The parties to the joint venture are unhappy because they are not both profitable. Instead of discussing it with each other, the parties start fighting. Either side calls a lawyer, and soon a lawsuit is filed citing all the reasons the venture has not been successful. But, after the other side has hired its lawyers and complained to the media, will it be possible to unravel the disagreement? Will there be an out-of-court settlement? If the lawyers were able to settle the matter, will it be possible to work together again? Super lawyers are called in, and the case is settled to mutual satisfaction.
There are dozens of similar real-life cases, but each one teaches us a different lesson.