Breach of Contract Basics for Your Business


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Though our world is so contract-driven, surprisingly few people know their rights when it comes to breach of contract.

This presentation examines breach of contract in detail, including what it means to create a legal contract.

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Breach of Contract Basics for Your Business

  1. 1. PURSLEY LAW FIRM Breach Of Contract Basics For Your Business It is almost impossible to imagine a world without contracts. Every day, you enter into contracts with employees, suppliers, customers, and with other businesses. Even if you are self-employed, you enter into contracts in order to get your materials and provide your services. But even though our world is so contract-driven, surprisingly few people know their rights when it comes to breach of contract. This presentation examines breach of contract in detail, including what it means to create a legal contract.
  2. 2. Every time you come to an agreement with someone, you create a contract. This can be an agreement to deliver something or it can be an agreement to perform some action. Most contracts are common-law contracts, meaning they are never signed or legally enforced, but rather taken simply on the word of the contracted parties. These contracts were the precursors for the legal contracts recognized worldwide today. Now, an actual contract document can be drawn up and signed by both parties to indicate agreement. This kind of contract has the full force of the law behind it and if broken can be legally actionable. In short, if a legally binding contract is broken, the person who broke it can be taken to court and punished. The best way to determine whether your contract is legally binding is to ask a lawyer who specializes in contract dispute litigation.
  3. 3. The second condition is the subject of the contract has to be an exchange of two things of value. Don't think the only "things of value" are cash - anything that can become cash, or be represented as cash, can be a "thing of value." Services and goods are definitely things of value. In fact, many contracts deal with an exchange of cash for a good or service. There are two basic steps necessary for a contract to be legally valid and thus legally actionable. First, the contract has to be agreed upon by both parties. This means there has been an actual, clear agreement, not just an expression of interest. Both parties have to clearly intend to honor the contract.
  4. 4. Now, notice what conditions are not present here. Nothing says that your contract has to be in "legalese,” that complex language that seems to be spoken only by lawyers. Simple contracts are often better because everyone understands them, meaning that everyone can be certain they are followed. Also, note that nothing mandates your contract must be written. Nonetheless, it is always easier to follow a written contract: you have the terms in writing, rather than in the memory of two parties who may have conflicting interests. It's always smart to write down your contracts instead of making them verbal only.
  5. 5. Contract enforcement usually falls into the jurisdiction of the state where the contract was actually created, not where you reside or where other parties reside. Most states use state law governed by court decisions and shaped by judges to handle contract disputes, making it very important to work with a contract lawyer who knows the state in question. Although most contracts will fall under the states' individual laws, any contract that deals specifically with sales of goods could be governed by the Universal Commercial Code, or UCC. The UCC standardizes the way such lawsuits are handled and although it isn't mandatory for states, many of them have accepted it and abide by it.
  6. 6. Breach of contract means one party to a contract has broken the agreement. If you agree to provide two units of a good now in exchange for three units of the good later and you provide your units on time, but don't receive the three units as expected, then the other party has breached the contract. When dealing with a breach of contract in the real world, there is more complex legal theory and terminology involved. The only way to determine whether you have been subject to a breach of contract and whether you can bring a lawsuit against the person who breached the contract is to hire a qualified lawyer. Never try to argue a breach of contract lawsuit on your own. A good lawyer almost always means the difference between winning and losing, even if you think your case is simple as they come.
  7. 7. The most important thing when looking for a lawyer is expertise. Contract law can be complicated, and you need a legal professional who has the knowledge to take whatever your opponent's lawyers can dish out. The legal code is a complex thing, and you can't possibly predict the curveballs that might come up during trial - that's why you need a lawyer who can predict them for you, and handle them before they become problematic. Look for someone with experience in contract disputes and an excellent knowledge of the state in which the contract was formed.
  8. 8. The first thing your lawyer will do is review the facts and determine whether you have a case. He or she will consider a number of different things before bringing the suit officially and will probably rely on you and the text of your contract. This is just one reason why it's so vital to put contracts in writing: if the contract is breached, your lawyer will want to see the signed text both parties agreed to. Otherwise, it can be very difficult to determine whether or not a viable case exists. Once your lawyer determines the contract has in fact been violated in an actionable way, the court process will start. Breach of contract disputes almost always go through the justice system and the courts, but there are other options that avoid formal lawsuits. Now What?
  9. 9. Mediator review and binding arbitration are both ways of resolving contract disputes without going through a lawsuit. It is vital you know your rights during these proceedings, even though they happen outside the umbrella of the justice system. In mediator review, the parties will call upon a mediator to review the facts of the case and offer a "verdict.” In the case of mediator review, the "verdict" is more of an opinion. It isn't binding, but serves as a deterrent to an expensive court battle.   In binding arbitration, both sides agree to be bound by the decision the mediator makes. This provides a chance for both parties to present a case, but it doesn't have the advantage of a full judge and jury.
  10. 10. Putting It Together PURSLEY LAW FIRM Once you have hired a lawyer and decided how to proceed with your case, the best idea is to trust your attorney. He or she will know what to do, and will be able to guide you through the court or arbitration. Be certain to ask your lawyer any questions you may have, and make sure you understand every step of the case. With the right attorney, your breach of contract dispute can be simple and the case can be open and shut.