You can sue somebody for not upholding their end of the bargain if you have a contract with them. However, we advise that you get professional legal counsel from an expert in contractual law before taking this route.
What Is a Breach of Contract?
A contract is an agreement that provides for certain legal obligations and duties that both parties are legally bound to follow. An example of a contract is when one party does something for another in exchange for a fair value. Such agreements are made based on the idea that all parties trust that the other parties will uphold their end of the bargain.
A “breach” occurs when someone does not uphold their end of the contract. This could be failing to make a payment, not completing a job by the agreed-upon date or delivering an inferior product. Depending on the terms of the contract, the person who was not in violation of the agreement (the non-breaching party) can sue for damages resulting from the breach.
Do I Have a Breach of Contract Case?
If there is a dispute over a contract, either party can file a lawsuit to have the contract enforced or receive money for losses. The parties may be able to resolve the dispute if they can agree on what to do about the breach. If one party does not accept the other side’s settlement offer, that party can file a breach of contract case with the court.
Some issues that come up in relation to breached contracts include:
- Was there a contract?
- What did the contract require from each party?
- Was there a breach?
- Was the breach material?
- Is there a valid defense for the breach?
- What damage was caused by the breach?
Was There a Contract?
A contract is only enforceable if it meets specific requirements. These include a valid offer, acceptance of the terms, and an exchange of value between both parties. Something valuable does not just have to be cash – it can also be a service or product.
Although a verbal contract typically holds up in court, it can be more challenging to prove than if the agreement was written down. If no physical record of the contract exists, then one person’s word against the other is often all that stands. Because each side usually has a different recollection of what they agreed upon, most breach of oral contracts are settled out of court. It is important to be aware that some types of contracts must be in writing in order for them to be valid and enforceable.
What Did the Contract Require from Each Party?
With a contract, one side offers to do something (or not do anything) in exchange for something of value. An example of this exchange is when a vendor provides the goods, and the small business buys them.
The parties involved will agree to the terms of their contract beforehand. These terms may require the vendor to deliver a specific item, including quantity and delivery date. There is also usually a section that requires businesses to pay vendors, which contains details like down payment and manner of payment.
Was There a Breach?
A breach of contract is when one party doesn’t uphold their end of the bargain specified in the verbal contract or written agreement. For example, if Party A agreed to make a payment for goods received from Party B but failed to pay, this would be considered a breach. In other cases, the failure may occur before an outcome is even supposed to happen; we call this an “anticipatory breach.”
Was the Breach Material?
There are two types of breaches in a contract: immaterial and material. The distinction between these two types of breaches is dependent on external factors and how much detail is present within the contract itself. If a party doesn’t uphold an obligation that is not key to the agreement, it is defined as an immaterial breach. However, if the breached term opposes the primary purpose of why the contract was created initially, it will be considered a material breach.
For example, if someone ordered 2,000 square feet of turf that was supposed to be 2 inches long, and the delivered turf was a few millimeters shorter than what was ordered but can still be used, that may be considered an immaterial breach. However, if the contract was for a custom machinery part that was a half-inch short, it may be classified as a material breach because it the part is unusable for the intended purpose.
Is There a Valid Defense for the Breach?
Generally, the breaching party may have legal defenses that would permit them to not perform under the contract – even if they breached it. For example, courts usually void contracts when it is illegal to carry out what was agreed upon. Another potential defense could be if someone only assented to the contract because they were threatened in some way.
What Amount of Money Can I Get for a Breach of Contract Claim?
Civil lawsuit losses are referred to as “damages.” In the case of a breach of contract, there are different types of damages:
- The most common type of damages awarded in a breach of contract lawsuit are called compensatory damages, which reimburse the non-breaching party for their direct losses caused by the breach of contract.
- Special damages are those losses that are not direct losses, but that were reasonably foreseeable when the contract was formed, so these types of losses can sometimes be compensated for under the law.
- Incidental damages are the extra expenses borne by the non-breaching party as a result of the breach. For example, needing to purchase replacement items or hiring someone else to complete a job at a higher price.
- If it is difficult to estimate how much money would reasonably compensate someone for the other party’s breach of a contract, the parties can agree on a set amount of damages instead. This is called liquidated damages and specifying them in the terms of the contract ahead of time avoids any conflict later on.
- Punitive damages are assessed against the liable party as a form of punishment for their actions, or in an attempt to discourage others from similar behavior. These types of awards aren’t common in breach of contract cases.
If a written or oral contract is violated, the offender can be sued for specific performance. This means that they would have to go through with what was originally agreed upon in the contract. For example, if you had arranged to buy land from someone and they found another buyer who offered more money, you could sue for specific performance of the original contract terms forcing them to sell the land to you instead. However, this legal remedy is only available under specific circumstances, one of which includes the sale of real property.
While in a breach of contract case, you are entitled to reimbursement of your lawyer’s fees, expenses, and the costs of your lawsuit if specified in your contract or based on the contract attorneys’ fees statute, A.R.S. § 12-341.01, courts will usually only award amounts that are considered reasonable.
Who Can File a Breach of Contract Lawsuit?
If any person involved in the contract experiences losses because of another party not upholding their end of the bargain, they can sue. The breach does not necessarily have to be significant in order to be material entitling the non-breaching party to recover damages. For example, suppose you sign a contract with someone saying you will design a website for them for a certain price, and then they only pay you part of what was agreed upon. In that case, you can bring legal action against them for breaching the terms of your agreement in order to receive the rest of the money that is owed to you.
How Do I File a Breach of Contract Lawsuit?
Breach of contract lawsuits can be filed in various courts in Arizona. If the parties involved live in different states, you can file a lawsuit in federal court if the amount in controversy exceeds $75,000.
In Arizona, you can file small cases in small claims court where attorneys are not allowed to be used if the amount in dispute is $3,500 or less. If the amount in dispute is between $3,500 and $10,000, then you can file your claim in the justice court precinct where you live. If the amount in dispute is over $10,000, then you would have to file your lawsuit in the Superior Court for the county you live in.
An experienced contract law attorney like Stephen J. Anthony and Anthony Law Group can help you understand your legal options if you have suffered losses due to a breach of contract. They can also file the lawsuit on your behalf in civil court and help you recover any money that may be owed to you.