Common Contract Breaches & Damages

Common Contract Breaches & Damages

Contracts are widely used within the course of business.  One party to the contract may fail to perform or breach the contract, leaving the injured party with a breach of contract claim.  It is essential to the protection of each party that the details and specifics of the contract be in writing to minimize confusion.  Breach of contract can be difficult to prove when a contract is vague.  If the contract is specific, then it is easier to prove when a breach has occurred and what will be the appropriate damages.

Contract Formation.  In the simplest form, a contract between two people occurs when one party has made an offer and the party has accepted.  The two parties must exchange something of value for something else of value, whether it be goods, cash or services. 

Common mistake.  The most common mistake made by people is the failure to put enough specifics in the contract created by the parties.  Ideally, a contract should clearly state what each party is going to do and when the parties will do it.  Although oral contracts can be created and are enforceable by a court of law, it is always best to put your contract in writing. 

Failure to perform.  When a contract is breached, it often from a failure to perform by one of the parties.  Once a valid offer and acceptance has formed a contract, the breach may occur when one party fails to perform the contractual obligation.  At this point, a dispute may arise regarding whether a valid contract was formed, whether the performance was the expected quality or whether certain conditions were unfulfilled.  A party may be excused from performing some obligations when certain factors are present.  Foreseeable problems should be accounted for within the terms of the contract.

Common breaches.  In addition to issues such as failure to perform, a party may also fail to fulfill the duties under the terms of the contract in other ways.  One party may breach the contract when he does something that makes it impossible for the other party to perform their duties.  Another common breach will occur when one party makes it clear that he or she does not intend to perform the stated duties of the contract.

Generally, both written and oral contracts are enforceable.  However, putting your agreement in writing will prevent confusion and increase the chance of having a court of law enforce the terms of the contract if a breach were to occur.  Specifics such as what is being exchanged, forms of payment, duties of each party and time of performance and payment should be included within the written agreement. 

Damages.  If a breach of contract has occurred, a court of law may require the breachor to pay damages.  Damages fall into four categories.  Consequential damages will require the breachor to pay the non-breaching party an amount that will put the party in the position they would have been if the contract had been performed.  Punitive damages are assigned to make the breaching party pay a monetary amount as punishment for breaching the contract.  Liquidated damages are a specified amount that is previously agreed on within the contract to be paid by a party who breaches the contract.  Nominal damages are used to pay the non-breaching party a sum of money when the contract is breached but does not cause much of a financial loss.

If you are having business related issues and would like to seek outside counsel, contact The Las Vegas Business Litigation Lawyers at The Dean Legal Group, 702-823-1354, to schedule a consultation.