People enter into contracts all the time. When you buy or lease a car, you sign a contract. When you rent or buy a home, you enter into a contract.
A contract places binding obligations on all parties entering into it. If one person or party fails to live up to that obligation – for instance, you quit making your car payments – it is considered a breach of contract. In the car example, the lender will likely repossess the vehicle if you fall behind in your payments.
Businesses are even more dependent on contracts. If you sell goods, someone must supply them, so you will likely enter into a contractual agreement with a supplier or multiple suppliers. If you offer professional services, most likely you will require your clients to enter into an agreement, or contract, that promises your services in exchange for their payment.
If you are a business owner who depends on others to help keep your enterprise operating, and one of them fails to deliver on the terms of your contractual arrangement, what are your options? Breach of contract disputes can be messy, with each side claiming the other failed to live up to the terms of the agreement.
If your business is located in or around Birmingham, Alabama, or anywhere in the state or adjoining Florida Panhandle, contact the Clark Law Firm PC. Attorney John W. Clark IV is dedicated to helping you resolve your business disputes, whether through negotiations, mediation, arbitration, or litigation. If you believe someone breached a contract with your business, contact John immediately.
A breach of contract can involve different situations: a partnership dispute, real estate transactions gone awry, failure to pay rent or lease obligations, sales transactions, promissory notes and collections, and more, so long as one party has agreed upon an obligation to another party and fails to honor it.
Employees can also present breach of contract problems. If you require employees to sign restrictive covenants, such as nondisclosure or non-compete agreements, those employees may often breach these agreements by joining a competing firm or going into business for themselves and using proprietary information obtained from your company.
The most basic of breaches of contract, of course, is one party just not honoring the agreement they reached. If Company A is to supply Company B with 200 widgets every Wednesday for X dollars, but Company C offers them X+10 dollars, then Company A may breach the contract for the bigger bucks. If Company B is unable to locate another supplier on similar terms, then Company B may have no choice but to seek damages for the breach of contract.
Not everything rises to the level of a breach of contract. Sometimes it may just be a matter of unclear wording in the agreement or a misunderstanding that can be ironed out.
Other times, the terms of a contract can be breached in a way that is not "material." For instance, your widget supplier is a day or two late with its delivery. Your sales and production quotas may be delayed, but your overall operations remain intact. A material breach would occur if the supplier stopped delivering your widgets altogether or for long enough that your business suffered financial loss.
To be successful on a breach of contract claim, you must prove the following four elements i:
The existence of a valid contract - whether oral or written, express or implied
You lived up to your side of the agreement or have a legitimate excuse for not having done so
The other party failed to perform as specified creating a "material" breach of the contract
You suffered damages (losses) because of the breach
An express contract is one that is written out and signed. An implied contract can be one that is orally agreed upon or results from the continued and historical interactions of the parties involved.
In Alabama, there is a six-year statute of limitations for bringing a breach of contract lawsuit.
As mentioned earlier, each side is likely to claim the other party breached the contract, no matter who brings the legal action. This can often revolve around wording in an express contract or interpretations of what was agreed to orally. If the wording in a contract is ambiguous or contradictory, the party accused of the breach can point to the language as a defense: “It didn’t specify when, where, etc.” If it’s an oral or implied contract, each side can claim differing interpretations.
Other defenses include being fraudulently coerced into signing the contract or being duped into a one-sided agreement - though defenses of that type are very difficult to prove. A party may also be able to argue that they lacked the capacity to agree to the contract, whether because of age (not an adult), intoxication, or mental issues at the time of agreement.
When a party to a contract suffers a breach, there are various remedies available:
Damages: The successful plaintiff can recover "compensatory damages" for losses suffered. Compensatory damages are damages intended to "compensate" the non-breaching party for the damage incurred or, in other words, to place the non-breaching party in the same position it would have been in had the breaching party properly performed.
Specific Performance: In certain situations, particularly those involving something other than a commodity (like corn, nails, or some other item that can easily be replaced by another item of the same type or kind), a plaintiff may ask the court to order the breaching party to fulfill its obligations or live up to its specified performance.
Restitution: Similar to compensatory damages, the non-breaching party can ask the court to award restitution to repay the non-breaching party for its out-of-pocket costs incurred due to the breach.
Not all contractual disputes need to go to court. Attorney John W. Clark IV will present you with your best options. He will fight for your rights, whether in court or through negotiations. If you’ve suffered a breach of contract in or around Birmingham, or throughout Alabama and the Florida Panhandle, reach out to the Clark Law Firm PC immediately.