People enter into contracts for mutual advantage because each has something the other party wants. It may be something as simple as buying a product for money, or something more complicated such as an employment contract with a no-compete clause.
If either of the parties do not fulfill their end of the contract, a breach of contract has occurred. At that time, you can try to resolve the issue with a letter or by negotiation. If all attempts fail, you may end up in a breach of contract case in a civil court.
When you are faced with a breach of contract, it is always wise to seek the advice of a business attorney who is experienced in that area. Your attorney will work to find the solution that is best and most efficient for you.
Breach of Contract Example Cases
Here are some examples of various kinds of breach of contract cases and attempts to resolve them.
Breach of Contract Example Number 1: Failure to Provide Services
Your business depends on other companies for some of its needs, including services like building maintenance and transporting clients. You have had a contract with a company for over ten years which is supposed to send in employees to do basic tasks like taking out the trash and cleaning common areas, but the company has failed to send anyone for the last two weeks.
When you called your main contact, you learned that the company had taken on extra work and was struggling to keep up with all the work. You got a promise that someone would come out when available.
You may either have a personal or business contract with another party who is supposed to perform services for you, but the reason you have a contract is that you depend on those services. In this case, you don’t have anyone you can spare to do this particular work, besides which you have already paid another company to perform those functions.
Best Option: Negotiation
In this case, you have a long-standing relationship with another company that you may want to protect. They are breaking the contract and being highly disrespectful, but they probably don’t want to lose your business either at this point.
Let them know that you are serious about enforcing the contract and that you expect to get credit for the work not done. You may want to talk to an attorney about whether it is better to find a mutual resolution where both parties walk away from the contract if the other company can no longer perform the necessary work.
Breach of Contract Example Number 2: Violation of Employment Non-Compete Clause
Your business has standard non-compete clauses in all its sales and technology employment contracts. In exchange, your employees receive several benefits, including training and certifications they won’t get at other businesses. One of your employees left on a bad note and immediately went to work for one of your local competitors. Your Human Resources Department sent a letter reminding him of the contract and providing a copy, but he has not responded.
Before you designed your standard contracts, you sat down with an attorney to make sure they complied with state law expectations. In Arizona, non-compete clauses are enforceable as long as they protect legitimate business interests, are reasonable in scope and duration, and as long as they don’t violate public policy. Your business stays ahead of the competition with some innovative training and methods, and you only require former employers not to work for local competitors for one year after separation from your company.
Best Option: Litigation and Attempt to Force Compliance
Although no one wants to go to court against a former employee, your rights in this matter are important. Once you can prove you have given consideration in exchange for their agreement not to work for competitors, you should seek to enforce the contract.
The Steps You Will Need to Take
- Write your demand letter. This will always be your first step when you know you may be litigating the matter.
- If your former employee doesn’t comply at that point, draft your complaint and explain what you are asking for. In this case, you may be asking for the Court to order compliance instead of asking for monetary damages. Make copies of everything.
- Send a summons to your former employee.
- Follow the rules of discovery and answer and crossclaims.
- Prepare for court by gathering all your necessary proof. Also, bring to court with you information regarding the legal basis of your claim, so you can prove the contract was reasonable under Arizona law.
Breach of Contract Example Number 3: Misrepresentation of Assets Being Used As Collateral
You negotiated a contract with another party who wanted to purchase a larger property for their business. As part of the collateral, you eventually agreed to accept a smaller property the other party purported to own. The other party has taken possession of the property but almost immediately stopped making the agreed on payments. When you tried to contact the buyer, your phone calls were refused. Upon further investigation, you discovered that the property being used for collateral was not worth as much as was represented to you during the negotiations and that the party would have known the actual value.
This case seems frustrating because the other party is being evasive and dishonest. Negotiation will be difficult if not impossible with a party attempting to trick you. However, you may be able to get results when you try the same methods with an attorney. While the offending party may not take you or the situation seriously, the threat of legal action up front may be more persuasive.
Best Option: Litigation and Attempt to Recover Damages
In this case, you have a valid reason to believe the other party committed fraud when entering into the contract. In order to secure the contract, there was a material misrepresentation as to the value of the collateral. That means that if you have to go to court, you could qualify for both compensatory and punitive damages. Punitive damages go above and beyond the actual amount of the claim and are aimed at punishing parties who act in bad faith.
The Steps You Will Need to Take
- Send your demand letter. Make it clear in your letter exactly what you are asking for, and that you know about the fraud.
- Draft and file a complaint in the correct court, citing the amount of damages you are seeking. Sign everything and make copies. If you were asking for an amount less than $50,000, you would be required to go through dispute resolution first, but if you are asking for punitive damages that won’t be an option.
- Send a summons to the other party.
- If the other party responds, you will need to respond quickly. Otherwise, prepare for trial and comply with the rules of discovery.
- Go to court and present your case to a judge or jury.
When you are the victim of a breach of contract, you only have a limited amount of time to bring a civil suit. There may be other reasons related to the contract that also make it urgent to resolve the issue as quickly as possible. If you contact a business attorney, you can learn your various options and how they might play out for your case.