One of the most common reasons that people and businesses become involved in lawsuits is due to an alleged breach of contract. The contract could be for goods, services, real estate, or employment, to name just a few of the most common subjects. The New Jersey breach of contract lawyers at Snellings Law LLC are experienced in protecting the rights of individuals and business owners in a variety of contract disputes. We can help you successfully navigate your lawsuit from inception to resolution, whether you are a plaintiff or a defendant.
Proving Breach of Contract
Regardless of the specific facts, the plaintiff in a breach of contract case must prove: 1) the parties had a contract; 2) the plaintiff did what was required by the contract or had an excuse for not doing so; 3) the defendant breached the contract by not performing; and (4) the plaintiff was harmed as a result.
To prove that a contract was created, the plaintiff must show that each party was required to give or do (or not do) something; the terms were sufficiently clear so that the parties could understand what was required of them; and the parties agreed to these terms.
Contracts may be written or oral, or a combination of the two. Most oral contracts are valid, although a few types of contracts must be in writing to be enforceable. However, it can be difficult to prove the terms of an oral contract or even whether a contract existed. When a dispute about an oral contract arises, the parties typically have very different stories about what they agreed to or whether they actually agreed to anything. Therefore, the best practice is to always put an agreement in a writing signed by both parties.
Other issues often disputed in contract cases are the meaning of specific language used in the contract and the time within which a party is supposed to perform.
Affirmative defenses are circumstances that excuse the defendant’s breach. It’s up to the defendant to raise and prove any affirmative defenses.
There are numerous affirmative defenses to breach of contract claims. Some of the more common include:
- Mistake—The parties made a mistake about the contract terms or one party made a mistake that the other should have recognized.
- Duress and fraud—The plaintiff induced the defendant to agree to the contract with threats, intimidation, or misrepresentation.
- Novation—The parties agreed to a new and different contract.
- Statute of limitations—The plaintiff waited too long to sue.
- Statute of frauds—The contract was oral, but it was required to be in writing.
Additionally, the plaintiff is required to take reasonable steps to reduce or mitigate damages in most cases. For example, if tenant moves out in breach of a lease, the landlord has to make a reasonable effort to re-rent the premises. The landlord cannot simply leave the premises empty and then collect all the rent due under the lease.
Once the plaintiff shows that a contract was breached without excuse, damages come into consideration. Unless the parties settle the case, usually a jury decides how much a plaintiff should be compensated for the breach of the contract.
Compensatory damages are the most common type of damages in breach of contract cases. There are two types of compensatory damages in contract actions – general and special. General damages are those that are directly caused by the defendant’s breach of contract. Their purpose is to put the plaintiff in the position the plaintiff would have been in had the defendant not breached.
For example, a business that is opening a new location orders carpet for its offices and reception area for $10,000. The carpet arrives but it is the wrong color, texture, and size. When the business asks the carpet seller to correct the error, the seller refuses insisting that it sent the correct order. The business purchases the carpeting it desires from a different carpet seller for $12,000. Assuming the price is reasonable (and the business can prove the carpet seller sent the wrong carpet), the business’s damages are the $2000 extra it must pay for the carpet, plus any amount it must pay to return the wrong carpet.
Special damages cover any loss that is incurred due to special circumstances that the parties knew about or reasonably could have anticipated when the contract was formed. Suppose in the above example, the contract provides that the carpet must arrive on or before a specific date so that the offices can open on schedule. As a result of the carpet seller’s breach of contract, the opening of the office is delayed two weeks until the replacement carpet can be procured and installed. In this case, the business may have special damages equal to the profits lost because of the delayed opening.
Another common measure of contract damages is restitution. If the business in the above examples had given the original carpet seller a deposit of $1,000, the business would be entitled to its money back in addition to the other damages.
Punitive damages (also known as “exemplary damages”) are very rarely awarded in contract cases, except in the most extremely egregious cases. Punitive damages are intended to punish or make an example of a wrongdoer who has acted willfully, maliciously or fraudulently.
In rare cases, the court may order the defendant to do what is required by the contract (e.g., transfer the title to real estate). This is known as specific performance.
Contract litigation is a complex process that requires the assistance of counsel. We have the experience and knowledge to guide you through every stage. Please call the New Jersey breach of contract lawyers at Snellings Law LLC at 973.265.6100 to schedule your confidential consultation.