Even people not familiar with business law know that breach of contract is not a good thing. What exactly is it? Is it possible to be in breach of contract without knowing it? Join us as we explain breach of contract 101.
What Is A Breach of Contract?
To define it simply, a breach of contract occurs when one person involved in the contract fails to meet or fulfill at least one of the conditions of the contract. Although, there can be a breach of contract on multiple levels
The breach may occur on either side, but common examples include failure to pay, incomplete work, providing inferior goods or services to those promised, and failure to deliver goods or services.
A breach of contract is a very common cause of civil action. Before this action can be taken, an attorney must determine some establishing facts. First, they must determine if a breach of contract has truly occurred. It is possible for someone to be dissatisfied with the outcome of an agreement, even when no breach has occurred. If they determine that the contract was breached, they must then figure out how much of the contract was breached.
How Is Breach of Contract Determined?
There is a checklist of requirements that must be met to determine that a contract has been breached.
- The contract must be valid. If it is not valid, it is impossible for a breach to occur, because there was not officially an agreement to not fulfill.
- One of the parties has to have suffered material damages. The exact damages need to be calculated to determine how impactful the breach was. Oftentimes, the damages are monetary, such as payment without delivery. There can however be property damages that need to be repaired, due to subpar materials and services.
- A demand letter with a formal explanation of the complaint should be sent to the party in breach. If the complaint is not corrected, then a lawsuit may be filed. If the complaint is addressed and the person in breach fixes it, then there is no suit.
This step helps avoid wasting the court’s time. If the letter is not sent, then it is possible for the person in breach to claim that they forgot something or that they simply made a mistake. It is important that the complainant documents any and all attempts to rectify the breach of contract. Documentation will make it easier to file a complaint in court, and will save you time with your attorney.
How Are Breach of Contract Cases Resolved?
Oftentimes, in Florida, the court uses recession as a solution to breach of contract cases. Recession is essentially a reset button on the contract. When a court decides on recession, both the party in breach and the complainant return to the state they were in before they entered into the agreement. Then the contract is declared null and void, as if the entire thing had never happened.
For example, if a person orders building supplies worth $1000, but only pays $100 of the total bill. Recession would state that the company that the person purchased the materials from gets all of the materials back in their original state. If those materials are used already, the person will have to pay the amount the material is worth. Most of the time the party in breach is beholden to pay the court dues as well.