Groups » How to Handle Breach of Contract?

Partnerships and contracts are agreed upon for the benefit of the involved parties, but they often don’t turn out to be beneficial. Often, one or more parties fail to comply with the contract terms, which results in loss or injury to other parties.

Let’s take the example of the breach of contract case between Walgreen Co. and Theranos Inc. The former sued the latter for a breach of contract between them, and the plaintiff demanded a compensation of $140 million. The suit filed in the U.S. District Court in Delaware states that “Theranos lied about its technology when the two agreed in 2010 to collaborate,” according to Wall Street Journal.

Partnership disputes among businesses happen quite often and the parties involved have to face delays, financial problems, and other unexpected events as well. If you have entered into a contract with another party and this other party has breached the contract, you can file a lawsuit and demand appropriate compensation.

What is Breach of Contract?

According to Wikipedia, “Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honored by one or more of the parties to the contract by non-performance or interference with the other party's performance.”

When a contract is agreed upon, the parties need to fulfill the obligations created by the contract. A breach may result if one or more parties fail to perform on time, do not perform at all, or do not perform in accordance with the agreement terms. Breach of contract is a type of partnership dispute and must be handled legally.

San Francisco partnership disputes can be categorized into four types namely:

1. Minor breach
2. Material breach
3. Fundamental breach
4. Anticipatory breach

The dispute between Theranos Inc. and Walgreen Co. discussed earlier is an example of material breach.

Remedies for Breach of Contract

The law states that if an individual or business breaches a contract, the non-breaching party will be eligible to get a ‘relief’ or ‘remedy.’ The major types of remedies are:

1. Damages – This is the most common remedy for breach of contract. The types of damages included in this are compensatory damages, punitive damages, nominal damages, and liquidated damages.

2. Specific Performance – This remedy can be requested by the non-breaching party if the damages are deemed insufficient. Under specific performance, the breaching party is compelled by the court to perform the duty as specified in the contract to compensate for the damages of the plaintiff.

3. Cancellation and Restitution – This remedy is designed to place the non-breaching party in the same position as it was prior to the formation of the contract. The non-breaching party also has the right to cancel the contract.

When Can You Sue for Breach of Contract?

According to the Statute of Frauds, certain contracts need to be in writing to become enforceable. These include sale of real property, promise to return someone’s debt, transfer of property upon death, and others. You can sue a person for breaching a contract that was created in writing or orally. Remember, you need to sue the breaching party within the statute of limitations. The deadlines depend on the state where you are filing the lawsuit, so it is best to hire an experienced lawyer who can help you file a lawsuit.

Here are a few things you will need to do before filing a lawsuit:

1. Determine the Facts

You need to determine whether or not there has been an actual breach of contract. In order to prove an actual breach, you need to establish the following:

1. Existence of a written contract,
2. Breach of the contract,
3. Damages suffered, and
4. The breach caused the damages.

Contracts can be written or oral; however, things become a bit more complicated in oral contracts. A lawyer will help you collect the evidence and information required to establish the above facts.

2. Contact the Breaching Party

It is necessary to get in touch with the breaching party and request full compliance with the contract. This is because it is always best to obtain the benefit of the contract rather than taking legal recourse. However, if the breaching party does not respond to your request or fails to comply with the contract all over again, you can proceed to the court.

3. Determine Whether You Are Eligible to File a Case

Consider the statutes of limitations for your state and determine whether you are still eligible to file a lawsuit. For instance, the statute of limitations for oral contracts in San Francisco is two years and for written contracts, it is four years.

4. Determine What Type of Breach Is Committed

You will require the help of an experienced lawyer to determine the kind of breach that was committed. This is necessary to help you decide the future recourse.

Remember, you need to provide enough evidence to prove that there actually was a breach of contract and the damages suffered were due to the breach. Hence, you must consider hiring a lawyer before you proceed to the court.

Conclusion

Breach of contract is one of the most common types of civil litigation filed in the courts. A breach of contract can potentially harm a business or an individual, so necessary steps must be taken as soon as you find out there has been a breach of contract. It is necessary to know your rights, options, and the available legal remedies to make sure you get the appropriate compensation. Remember, it may be difficult to prove fault in a breach of contract case, but with the right preparation and representation, you can get the desired outcome.

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