What Is Contract Litigation?

Contracts are the backbone of business deals. They come in all shapes and sizes: written, oral, and silent. In fact, many folks are likely agreeing to contracts daily without even realizing it.

Contracts are often complex and confusing and sometimes a little sneaky. When one party fails to uphold their end of the contract, an attorney can help you make it right. Just ask John Leonard. He sued Pepsi after he tried to redeem his Pepsi Points for an AV-8 Harrier II Jet. Yes, you read that right, a jet plane. Now, that case didn’t exactly work out for John, but less outrageous contract disputes happen all the time. 

An average of 9% of contracts will end in either a dispute or a significant claim, according to World Commerce & Contracting studies. This page covers what constitutes a breach of contract, some examples of common contract disputes, and how those disputes get resolved. Read along to find out what options are available and how a contract litigation attorney might be your best bet for resolution.  

What Is Considered a Breach of Contract?

A contract is a legally binding agreement between two or more parties. This contract can be written or orally agreed upon. A breach of contract occurs when one of those parties fails to deliver what was agreed upon in the contract. In order to have a valid claim, the four following elements must be present:

• A legally binding contract 

• The plaintiff fulfilled their contractual obligations

• The defendant breached their contractual obligations

• The plaintiff suffered a loss as a result of the defendant’s breach

If the four elements above are present in your case, there may be a valid breach of contract. A breach can be broken down into four main categories: anticipatory, actual, material, and minor. It’s important to understand which of these breaches has occurred so that you have a clear idea of what damages and remedies can be legally secured. We’ll break down these four categories below. 

• Anticipatory: An anticipatory breach is when one party becomes aware that the other party is not going to fulfill their portion of the contract by the agreed-upon date or will be unable to complete the job. 

• Actual: An actual breach is the full deal, meaning one party either refused entirely or incompletely. 

• Material: A material breach occurs when one party ends up with something significantly different from what was specified in the contract. For example, you hired someone under contract to build a porch, and you ended up with a hot tub instead. 

• Minor: A minor breach has occurred when one party violates a portion of the contract but not the whole thing. 

Can I Sue an Individual for Breach of Contract?

If a breach of contract is not able to be resolved between the parties involved, legal action may be taken. An individual can pursue legal action to obtain proper compensation if a contract has been breached. This will allow them to acquire the necessary services they were entitled to but did not receive in the original agreement. However, there are different remedies depending on the case. As mentioned earlier, certain elements must be present in order to have a valid case. 

Before anything else, there must be a legally binding contract and that contract had to be violated by one of the parties. Additionally, as a result of that violation, the non-breaching party must have suffered a loss. A litigation attorney may be able to look at your case and guide you on whether you have a valid and reasonable case. 

Can I Sue a Business for Breach of Contract?

You can sue a business for breach of contract. At any point in which a business violates a contract, then there are grounds for legal action. Much like the section above, the case must have the four elements of a breach. Business contracts can be very complex, so it is best to enlist the help of an attorney to guide you through the contract and advise on the best action to take. 

Can I Sue the Government for Breach of Contract?

Just like any other individual or business, the government has to uphold its end of any legally binding contract. If they breach the contract, it is possible to sue them for damages. However, there is a specific process that must be followed. 

In 1978, the Contracts Disputes Act (CDA) was implemented to resolve disputes between government agencies and contractors. The CDA deals with most contracts, including the procurement of property, services, construction, alteration, repair or maintenance, and the disposal of personal property. 

The 4 Most Common Contract Disputes

Our world is chock full of different types of contracts. Anything business-related often has some legally binding agreement that goes along with it. In this section, we will go over some of the most common types of contracts that get disputed and the reasons for them. The four contract disputes we’ll discuss are Commercial Leases, Non-Disclosure Agreements, Non-Compete Contracts, and Consumer Contract Disputes.

Commercial Leases

A commercial lease is an agreement between a landlord and a tenant renting the landlord’s property for business purposes. Landlords are legally obligated to follow the terms and conditions set out in a lease agreement, and failure to do so is a breach of that contract. Common breaches for commercial leases are failure to make repairs, increasing rent without notice, or evicting you without warning. If you have upheld your contractual obligation and are stuck with a landlord who refuses an attorney, can help you by moving to terminate the lease, guiding you through a legal trial to enforce your rental agreement, and sue for damages when the landlord’s action has hurt your business.  

Non-Disclosure Agreements (NDA)

As you may have heard in a Billie Eilish song, a non-disclosure agreement (NDA) is a contract signed between parties that protects secret, sensitive, or highly-protected information from being shared or spoken about. This is popular for workers on movie sets, scientific research, and celebrities who just don’t want their information leaked. 

A breach of contract, in this case, is when a person indeed leaks (or is accused of leaking) the information they agreed not to share. An NDA breach requires evidence to prove where the information came from and that it was not to be shared. An experienced attorney knows what information to seek to help prove an NDA breach. Further, if the person who leaked your information made money off it, they can help ensure that money makes its way back to you so nobody profits off of your misfortune. 

Non-Compete Contracts

Sometimes, when a person is hired for a job, the employer makes them sign non-compete contracts to guarantee that the hiree won’t get a job with a competitor and spill their trade secrets. However, an attorney may be able to help the hiree in this case if they are able to prove the non-compete was unfair and made in bad faith. In certain states, non-compete agreements are only considered valid if they are deemed crucial to the survival of the company. If you signed a non-compete contract that is restrictive and unfair, enlist the guidance of an attorney to ensure you have every employment opportunity available to you. 

Consumer Contracts

This is a contract most people don’t even know they’ve agreed to because it is the only one that doesn’t require a signature. A consumer contract is put into place each time a merchant sells a product to a consumer, like selling your used car or buying a TV from the electronics store. The merchant promises that, in exchange for your business (aka your money), they will provide a safe and functional product. If that product is defective or hazardous, the other party has breached their contract and must provide an exchange or refund to the consumer. If the manufacturer or seller fails to provide the remedy, they are in breach of contract, and the consumer could sue. Consumer contracts are protected under the Uniform Commercial Code (UCC) and, therefore, have specific laws set out to protect buyers. An experienced contract attorney will know the ins and outs of these laws and can help guide you through your rights and present your case.

Potential Outcomes of Contract Disputes

Remember in Shrek 3 when Rumpelstiltskin secretly writes in Shrek’s contract that “True Love's Kiss” could nullify the contract and reset his life? An experienced lawyer will seek the remedies listed below as your “True Love's Kiss.” These solutions are to ensure you Damages

A common remedy for a breach of contract is payment of damages. Damages are the money awarded in lawsuits. Four main types of damages apply to contract litigation: compensatory, punitive, nominal, and liquidated.

Compensatory damages are just as they sound, to reimburse the financial loss you suffered from the breach of contract. Compensatory damages allow the victim to regain the financial level they had before the contract so that they may seek the service out elsewhere without taking a loss. 

Nominal damages are a small amount of money awarded when the breach of a contract has occurred, but the victim has suffered very few losses and there is no need for compensation. 

Liquidated damages are damages laid out beforehand in the contract between the two parties in case of a breach. This means that when the parties sit down and write the contract, they agree that if there is a breach of contract, a specific sum of money will be paid to the person who upheld their end of the contract by the person who didn’t. 

Punitive damages are meant to punish the “wrong doer” in a trial. The money awarded from punitive damages is normally a larger sum than the actual loss the victim suffered. These types of damages are rarely seen in contract litigation but can happen in cases where there was serious wrongdoing. An example of punitive damages in contract litigation is a manufacturer who sold a product despite knowing it was dangerous, and it ended up injuring the person who bought it. 

Cancellation

Cancellation remedies the breach by making the contract null and void. This effectively ends the contract and relieves all parties of any obligations they had agreed to in the contract. If the non-breaching party has suffered losses or already provided their portion of the agreement, they can seek restitution, which we’ve broken down below. 

Restitution

Restitution allows the innocent party to recoup the losses they suffered as a result of the contract breach and erase any profit made as a result of their contract breach. 

For example, imagine a celebrity’s assistant with a legally binding NDA wrote a tell-all book about their client and made a ton of money on the sales of that book. If the assistant disclosed all of that information illegally, a judge could rule that any profits they made from the book be awarded to the client so that the contract-breaching party doesn’t benefit from the breach. 

Specific Performance

Specific performance means the court has ordered the contract breacher to follow through with their end of the deal. Most often, the goal of this remedy is used in real estate or collectible (art or other valuable personal property) cases but can be applied in any case where the cash payment cannot replace what was lost. Say you are buying a house, the contract is signed, and the seller backs out. Under this rule, the owner may be required to go through with the sale. 

How To Find a Contract Litigation Attorney

A contract dispute can happen for several reasons, whether a disagreement of the terms or a full-on breach. Check out Expertise.com’s directory to get the guidance you need to best navigate your dispute. An attorney can counsel you on the practicality of your lawsuit and weigh the best options for your desired outcome. They know the ins and outs of contract law and can review and explain the meaning of each point in a contract so you know your rights are protected.