What is Breach of Contract
It is not uncommon for people to ask whether they have a legal claim for breach of contract against another party. In order to understand when a claim for breach of contract may be appropriate, it is first important to review what constitutes a breach of contract.
When a person has an idea for a business, it is customary to create a formal agreement outlining the terms of the relationship with the other party. There are a number of different types of business agreements. When parties reach an agreement, there are certain promises being made by each party to the agreement. Parties are entitled to rely on the promises and representations of the other party to the agreement. If one of the parties to the agreement does not live up to its part of the deal, it may have breached the business agreement. Thus, a breach of a business agreement is an unlawful failure or neglect of one party to the agreement to fulfill its duties to the other party under the agreement.
There are many examples of a breach of contract between parties. An agreement may have been reached about the cost of goods or services , and a failure to pay for the cost of the goods or services may constitute a breach of contract. It may also be a breach of contract if a party to an agreement fails to perform its obligations to the other party. If a party to a lease fails to pay rent, it is a breach of the lease agreement. If a party is supposed to perform work at agreed upon times or at an agreed upon cost, failing to perform may also be a breach of contract. If a contractual agreement turns into a dispute, it may be necessary for parties to seek assistance in resolving the issue. A party that believes the other has breached the agreement may issue a written notice of default to the breaching party. Before proceeding with legal action, it is generally courteous to notify the offending party before bringing a legal claim. If the parties are unable to resolve the dispute, seeking assistance from the Administrative Law Judge Division may be appropriate. An Administrative Law Judge may schedule a formal hearing to decide the matter if the parties are unable to resolve the dispute.
Essential Elements of a Breach of Contract Complaint
A breach of contract complaint, if filed in a Court, needs to include the following elements: 1) identification of the Parties to the dispute; 2) description of the contract that is alleged to be breached; 3) allegations regarding the manner in which the contract was breached; and 4) a specific description of damages sought.
Further, the elements of Contract Law generally are the four following: an agreement between two or more parties to exchange something of value; consideration (something of value given in exchange for the item promised); the required capacity to contract (the ability to contract freely without regard to mental illness or intoxication); and lawful purpose (having an objective that does not violate criminal laws or public policy). The four elements found in a response to a breach of contract complaint are also required in a breach of contract complaint.
Formulating the Complaint for Breach of Contract – Step by Step
- The Initial Draft: Placing every single detail about the deal itself in the complaint may seem important to you, but the Court may not want to hear all of them. So start with identifying your cause(s) of action – and then use what you need to support each of them. In most breach of contract suits, this means putting in only enough details about the deal to explain why you have a case, but adding information about the deal itself – the "who," "what," "where," "when," and "why" – may be all that’s needed to tell the Court what’s needed to support your claim.
- The Basis: With some exceptions, the Court basically wants to know what was agreed upon, what went wrong, and how you were harmed. Your complaint should contain the legally required language – the "what" happened to support each of your causes of action. This helps the Court determine whether you have any or all of the elements needed to meet standard for proving the breach of contract.
- Legal Claims: If you are suing under an express contract, state what the parties agreed to do, and meet the other elements proving breach of contract:
The terms of the agreement;
The specific acts that violated the terms;
The resulting damages that resulted from the violations;
The what and why clearly are for your breach of contract claim, which is the same for the breach of fiduciary duty claim, but with important additions: the what and why. For your breach of fiduciary duty claim, you additionally need to add that the defendant had a:
Duty to act in the best interest of the plaintiff;
Duty to act in good faith;
Duty to act reasonably and/or in accordance with the terms of the contract;
Duty not to allow conflicts of interests to interfere with the plaintiff’s expectations of the fiduciary.
Pitfalls to Avoid
Common mistakes to avoid in drafting a Breach of Contract complaint include but are not limited to: (a) failing to include key facts; (b) failing to include the elements of the claim; (c) failing to include supporting documentation and references; (d) failing to include dates of the pertinent events; (e) failing to have a count for each legal theory alleged (i.e., have a count for Declaratory Relief, Permanent Injunction or Damages); (f) alleging fraud without alleging the elements of fraud; (g) fighting the State Bar; and (h) filing the court papers with the Clerk of the Court. The complaint should include all relevant factual allegations (including the specific dates that the parties performed their obligations under the contract), and as many of the necessary elements as the complaint can allege . If the complaint does not include the elements of the claims, then the defendant can successfully demure to the complaint because it fails to state a claim. Also, if the complaint does not include sufficient factual allegations, then the defendant can successfully demure to the complaint because it fails to state a claim. Thus, the elements of each claim and the facts of each claim should be explicitly stated in the complaint as succinctly and completely as possible. The complaint should also have counts for Declaratory Relief, Permanent Injunctive Relief, and Money Damages, if such relief is warranted.
Example of a Breach of Contract Complaint
May it please this honorable court, the plaintiff does hereby state the following facts in support of his claims.
PARTIES
- Plaintiff is a natural person and resident of County 1, State 1, USA;
- Defendant LLC is a limited liability company formed under the laws of State 2 with its primary place of business located in County 2, State 2, USA;
- Defendant Corp is a corporation organized under the laws of State 3 with its primary place of business located in County 3, State 3, USA.
JURISDICTION
- This Honorable Court has subject matter jurisdiction pursuant to Title 28 U.S.C. § 1332(a)(2) because the matter in controversy exceeds the sum or value of seventy-five thousand dollars ($75,000.00), exclusive of interest and costs, and is between a citizen of a different state and a citizen or subject of a foreign state;
- This Honorable Court has personal jurisdiction over Defendant Corp pursuant to Title 28 U.S.C. § 1332(c)(1) and Fed. R. Civ. P. 4(h), because Defendant Corp is a citizen of a State of the United States;
- This Honorable Court has personal jurisdiction over Defendant LLC pursuant to Title 28 U.S.C. §§ 1332(c)(1), 1391(c) and Fed. R. Civ. P. 4(h) because Defendant LLC is a corporation formed under the laws of State 2 with its primary place of business in County 2, State 2, USA and because it has sufficient minimum contacts with the State of State 1;
- This Honorable Court has personal jurisdiction over all Defendants pursuant to Title 28 U.S.C. §§ 1332(c)(1), 1391(b)(2) because the lawsuit arose out of or relates to the transaction of business in the State of State 1.
CLAIMS FOR RELIEF
COUNT I
Hezekiah Penny vs. Defendant LLC
- Defendant LLC breached and repudiated the terms of its contract with Plaintiff by (here, tell the court exactly which part of the agreement your opponent broke, and how it either caused you damages directly, or assisted in causing a subsequent damage. Provide supporting evidence (i.e. doc. 23) to support your assertion);
- Plaintiff complied with his duties under the parties’ contract;
- Plaintiff would be unfairly prejudiced by any remedy other than complete rescission of the contract.
COUNT II
Hezekiah Penny vs. Defendant Corp
- Defendant Corp breached and repudiated the terms of its contract with Plaintiff by (see above);
- Plaintiff complied with his duties under the parties’ contract;
- Plaintiff would be unfairly prejudiced by any remedy other than complete rescission of the contract.
Practice Tips and Other Considerations
When it comes to filing a breach of contract complaint, you should ensure that you’ve engaged the services of effective legal counsel to assist you in understanding your rights and obligations under the contract, and also ensure that you’re taking into account other factors that may or may not be included in a complaint, but can be crucial for your case generally. In this section, we’ll look at some of those other factors, such as choosing the right jurisdiction to address your complaint, determining whether your complaint is an oral or written contract, and the statute of limitations.
Choosing Jurisdiction: Sometimes, jurisdiction for a breach of contract complaint can be challenging, especially when the location of the damages, the location of the parties, or receipt of the subject contract, are all in different locations. For these reasons, it can be hard to determine which state courts or federal courts are the proper venue for your breach of contract claim. For example, if a California company fails to pay a Virginia company for services rendered in Georgia, does the Virginia company go to federal court in Virginia, Georgia state court, or California state court? The respective answers to these three scenarios are: Yes; No; and No. This is because the United States federal court system is divided into 94 smaller districts, which encompasses all the fifty states, and either a state-run court system, such as Virginia or Georgia. The question, therefore, is not so much whether or not you can file a complaint for breach of contract in a federal court, but rather, which federal court district is proper.
The federal court districts consist of 1) all 50 states with one district throughout the state, or 2) one district encompassing multiple states. In 2019, there were 12 individual federal court districts: Texas, California, New York, and Florida have the most districts, with multiple court locations throughout the state; the remaining states have only one district encompassing the entire state. In the scenario discussed above, the breach of contract complaint would have to proceed in one of the five districts located in Texas, California, New York, or Florida. But since the Virginia and Georgia are not included among these states, the Virginia company could not have its suit heard there. Instead, it would have to file its complaint either in the district encompassing the site of performance or in the district in which its corporate headquarters resides .
Moreover, while the scenario discussed above includes a Georgia company, which is actually where the services were performed that led to the breach of contract claim, there are other factors to consider. First, the Georgia company has corporate headquarters in Virginia, so a case could be filed in Texas, California, New York, or Florida. Second, the principal place of business for the California company is in Texas, so a complaint could be filed in any of these 12 districts. Lastly, because at least one entity resides and conducts business in these four states, it is highly unlikely that a federal court would find that it does not have personal jurisdiction over the parties and the matter. By comparison, a Virginia state court or federal court could just as easily dismiss the case as being improperly venued or for lack of personal jurisdiction, based on the fact that the parties and the subject business activity are not all located there. Therefore, careful consideration must be given to what proper venue is for the breach of contract case, because the wrong choice could mean the dismissal of the case altogether.
Another example of this is a company with several regional offices that might be the subject of a breach of contract claim, but which contract might not have been negotiated at those same regional offices. If those offices don’t have the authority to enter a contract, that would factor into the decision of where, and how, to bring the case. In addition, the statute of limitations for any breach of contract can be different from jurisdiction, whether federal or state, so it is important to determine how long the statute of limitations is for a breach of contract claim in the various jurisdictions discussed in the preceding paragraph.
Oral Contracts versus Written Contracts: When it comes to enforcement of your rights under a written contract, you will have different burdens of proof based on the type of contract involved in the case. For an oral contract, you will have to prove the terms of the contract; you must show what the parties’ intent was to enter into a contract. Under a written contract, you do not necessarily have to prove the intent of the parties. Instead, the terms of the written contract are presumed to express the intent of the parties.
In order to prevail on a breach of contract claim, regardless of the type of contract, the plaintiff must prove: 1) legal formation of a contract (offer, acceptance, legal capacity, consideration); 2) breach by the defendant of the contract; and 3) resulting damages incurred by the plaintiff as a result of the breach.
