Atlanta, Georgia Breach of Contract Attorneys
Contract disputes are at the heart of many business litigation cases. Generally speaking, a contract is a legally binding or enforceable agreement between two or more parties. Contracts, both express (written) and implied (oral), form the basis of most business relationships. When one party does not perform or live up to his obligations under a contract without justification, the other party may have a legal claim for breach. As discussed below, there are several possible legal remedies for a breach of contract.
What are the basic requirements for a contract?
To be legally enforceable, all contracts need to meet certain requirements. First and most importantly, there must be mutual assent or agreement by the parties. This is sometimes referred to as a “meeting of the minds.” Second, the agreement must cover all material or important terms, which should be clearly defined and unambiguous. Examples of material terms are property descriptions, price, timing and conditions of payment, etc. Third, there must be adequate consideration, or value, to support the parties’ obligations under the contract. Fourth, the subject matter of the contract must not violate public policy. For example, a gambling contract would not be enforceable in a state where gambling is illegal. Finally, the parties must be competent (of sound mind) and legally able to contract (generally, 18 years or older).
Contract disputes generally center on one or more of the key requirements above. For example, a party to a contract may claim there was no agreement as to either the general subject matter of the contract or its material terms. Or, a party may challenge the consideration supporting a contract. Sometimes issues of competence arise, for example when a decedent’s mental capacity to contract or execute a will before death is challenged.
In drafting a contract, it is difficult to anticipate every potential circumstance or event that might occur affecting the parties’ obligations or performance. In addition, many business contracts, even those prepared by counsel, contain ambiguous or seemingly conflicting terms and are subject to differing interpretations. Contracting parties can attempt to take advantage of the ambiguity in a contract to obtain an economic advantage. Whether a valid breach of contract claim exists, what remedies are available and the best course of action to pursue (including possible litigation) should be looked into as early as possible by experienced business litigation counsel.
Must contracts be in writing to be enforceable?
The law does not require that all contracts be in writing. With few exceptions, oral or implied contracts are enforceable so long as they meet the general requirements for contracts. Proving the existence and terms of an oral contract can, however, be more challenging than proving a written contract. Evidence of an oral contract will typically include the testimony and statements of the parties, as well as evidence of circumstances (including the parties’ conduct) that tend to prove the existence and terms of an oral agreement.
Georgia law does require that certain contracts be in writing to be enforceable. This rule is known as the “statute of frauds.” These agreements include contracts for the sale of land, agreements that cannot be performed within one year from making, promises to pay the debts of another, and promises to lend money.
What are the legal remedies for a breach?
Generally speaking, there are three main legal remedies available for breach of contract: damages, rescission and specific performance.
A party who suffers financial harm due to a breach of contract may seek in a lawsuit to recover money damages to compensate for the harm. Depending upon the terms of the contract and factual circumstances, the following elements of damages may be recoverable: (i) compensatory damages or money to compensate for actual or out-of-pocket business losses; (ii) consequential or incidental damages for additional losses flowing from the breach, such as lost revenue or income owed under a contract; (iii) attorneys’ fees and court costs; and (iv) liquidated damages established by the contract (typically in place of compensatory or consequential damages). The purpose of awarding damages is not to punish or deter the breaching party, but to restore the injured party to the position he would have been in had the contract been performed.
As a general rule, damages must be definite and non-speculative. For example, future profits (as opposed to revenue) are generally not recoverable because they are considered too speculative and uncertain. However, if a business suffered lost revenue for a specific period of time those losses may be recovered. In some cases, parties agree in a contract to liquidated damages or a predetermined amount of damages one party agrees to pay in the event of a breach. Courts generally enforce liquidated damages provisions so long as the agreed-upon damages are a reasonable estimate of the harm flowing from a breach, rather than a penalty.
Another remedy for a breach of contract is known as rescission. This is where the injured party elects to rescind or cancel the contract due to the other party’s conduct or fraud. In such cases, the law seeks to restore the non-breaching party to his or her position as if the contract never existed. This typically means that any money or consideration paid by the non-breaching party is returned, and compensatory or consequential damages flowing from the breaching party’s conduct may also be recovered.
Specific performance is an equitable remedy available in certain cases, where a party seeks to use a court’s power to force the breaching party to perform its contractual obligations. Because specific performance is considered extraordinary relief, it is only available if money damages would be inadequate to fully restore the non-breaching party. A common example of specific performance is when a buyer seeks an order compelling a property seller to complete a sale required by the parties’ contract. Another type of equitable relief that may be available is reformation, where the court changes the terms of a contract to reflect the parties’ true intent as proven through parole evidence, or evidence outside of the contract.
Punitive damages are generally not allowed under Georgia law for a breach of contract, except where the breach also involves an intentional tort such as fraud. Even if a defendant breached a contract in bad faith, a Georgia court is unlikely to award punitive damages in the absence of an intentional tort. However, evidence of bad faith in the making or performance of a contract may support a recovery of attorneys’ fees and court costs by a prevailing party in court.
What happens in a breach of contract case?
In Georgia, a plaintiff or suing party has the burden of first proving the existence of a contract and its material terms. For written contracts, this task is relatively straight-forward. However, if the court determines that a provision in a contract is ambiguous and requires parole or additional evidence to prove, then a jury might need to decide whether a contract existed and, if so, the material terms. In cases involving oral agreements, the jury or trial judge sitting as fact-finder will be required to listen to the testimony of parties and any other witnesses and determine the existence and terms of an agreement.
After proving a contract’s existence and its terms, the plaintiff must then prove that there was a breach of the contract and that he suffered damages as a result. The question of whether a breach occurred is for a jury or trial court to decide. As noted above, a plaintiff’s evidence must show that the damages flowing from a breach of contract are non-speculative and were actually suffered. In some cases, a plaintiff may also be required to show he used ordinary care and diligence in trying to mitigate or lessen the harm after a breach occurred.
The defendant in a breach of contract case may raise one more defenses that might render the contract unenforceable or allow the defendant to repudiate the contract. A common defense is that there was no legally binding contract because the plaintiff failed to establish one or more of the legal requirements. For example, a defendant may argue there was no meeting of the minds necessary to form a valid contract because one or more material terms was not agreed to (for example, price). Or a defendant might argue there was inadequate consideration to support the formation of a contract. A defendant may also try to argue that the plaintiff’s actions or nonperformance released the defendant from fulfilling his promises made in the contract.
When should I hire an attorney?
The phrase “prevention is the best cure” applies with full force in the area of business law and contract disputes. The best way to avoid a potentially costly, time and energy consuming legal battle is to have a qualified business lawyer review (or better yet prepare) an important contract before it is signed. Read more about the importance of contract review and drafting. While in some circumstances having a lawyer review documents is not practical or possible (for example, treatment forms signed at a hospital or doctor’s office), for important business relationships and transactions having qualified business counsel review and make necessary changes to a contract can make the difference between the ultimate success or failure of a venture.
The terms and circumstances surrounding every contract are unique. There is no such thing as a “form” contract or “boilerplate.” The actual words used in a contract are of great importance, because the law and courts favor the enforcement of contracts by looking to the expressed intent of the parties. Often, what is left out or not said can be equally important in determining the parties’ intent and subsequent rights and obligations of the parties. The time to ensure a written contract accurately and completely expresses the parties’ agreement is before it is signed.
When a dispute does arise, don’t assume that the contract says what you believe it does. You should have an experienced business litigation attorney review the contract and advise you on your rights and obligations and any legal issues you might face. Otherwise, you could make faulty assumptions that might cause you or your business further harm down the road.
The Atlanta, Georgia business litigation and breach of contract attorneys at Brownstein & Nguyen have decades of experience representing individuals and businesses in business and contract disputes. Our attorneys will meet with you, review your documents and assess whether an actionable breach of contract has occurred, and discuss your legal options and the best course of action. Our attorneys have a proven track record, both in and out of the courtroom, of achieving the best possible results for clients in business litigation and contract dispute cases. Click here to view examples of cases we have handled and notable results, and click here to see what our clients say about our experience and dedication in handling their claims.
If you, a family member or colleague is involved or may become involved in a contract dispute, call or contact our experienced business litigation and breach of contract attorneys in Atlanta today for a free consultation.
