Breach of Contract? Here's What You Need to Know Before You Sue
When you sign a contract, such as a partnership agreement or supply agreement, you expect the other party or parties to fulfill their obligations. But what do you do when that agreement is violated? For instance, what if a business partner misuses company funds, violating the terms of the contract, or a supplier fails to deliver the agreed-upon products? Such a violation can jeopardize your business. If a breach of contract has happened, you have the right to take legal action to protect your interests, including filing a lawsuit against the violating party in court. However, before you sue, it is vital that you pause and understand certain key things. There are things that can impact your finances, time, and even the strength of your case. our business law attorneys take you through the critical things you need to know before filing a breach of contract lawsuit in Pennsylvania.
Defining Breach of Contract
In Pennsylvania, a contract is said to have been breached if one party to the contract fails to meet their obligations. This failure can take many forms, including;
Missing deadlines without a legitimate reason
Failing to deliver goods or services as promised
Not paying for completed work
Delivering products or services that are of poor quality
Not all breaches are equal in severity. Some may cause minor inconveniences, while others may result in significant harm.
Types of Breaches of Contract
Understanding the type of breach that you are dealing with is vital. It can help you make a wise decision regarding the steps to take next. In PA, a breach of contract can occur in three main forms;
Material Breach
This type of breach arises when a party fails to perform a significant, essential term, destroying the core purpose of the contract. For example, if you contracted a supplier but they brought you something completely different from what was specified in the contract.
Minor Breach
A minor breach does not prevent the agreement's overall purpose from being fulfilled. For instance, if a supplier delivers a product a day late, but the product meets all specifications.
Anticipatory Breach
This type of breach occurs when a party indicates in advance that they will not fulfill their end of the deal.
Your Legal Options
Before filing a breach of contract lawsuit, you must understand that it is not the only way to handle matters. You may have several other options that may be less time-consuming and less costly. They include;
Negotiation: Some breaches happen by accident or due to unexpected events. A conversation with the other party may fix the issue in such a case.
Mediation: This involves working with a neutral third party (the mediator) to resolve the issue outside of court. The mediator’s role is to help parties come to an agreement. They don’t make the final decision.
Arbitration: It involves an arbitrator or panel of arbitrators, listening to both sides and making a binding decision.
If the above options fail or are unsuitable, filing a lawsuit could be your best option. Suing may also be a good option if;
You have strong evidence
The damages are significant
The breach involves fraud or bad faith
You need court-enforced remedies
Vital Steps Before Filing a Lawsuit
If you decide to file a lawsuit, here are some of the crucial steps you need to take;
Determine if You Have a Strong Case
Not all breaches justify filing a lawsuit. To have a strong case, you generally need to prove the following elements;
The existence of a valid contract
You fulfilled your obligations or had a legitimate reason for not performing
The other party breached the contract
You suffered measurable harm or financial losses
If you cannot prove all of these elements, your lawsuit may not hold up in court. That is why it is crucial to consult an experienced contract attorney before filing a breach of contract lawsuit.
Gather Supporting Documentation
The success of your case hinges on your evidence. The stronger the evidence, the better your chances of succeeding. Gather and organize all documents, including;
The contract in question
All communication between the parties, such as emails and text messages
Performance records, such as invoices and receipts
Evidence of the damages suffered, such as additional expenses or lost profits
Calculate Damages
Another vital step to take before filing your lawsuit is to determine what the breach cost you. Work with an attorney to identify your losses and calculate a dollar amount.
Stay Ready for Settlement Talks
Even after you file a lawsuit, you need to stay open to settlement talks. Many lawsuits are resolved through settlement. Settling your case can help you save time and money while protecting your rights.
Common Defenses To Breach of Contract Claims
Before filing a lawsuit, knowing the defenses the other side may raise is crucial. Common defenses to breach of contract claims include;
Lack of capacity, meaning one party was not legally able to enter the contract
Fraud or misrepresentation
Invalid contract
Impossibility or impracticability, meaning unforeseen circumstances made it impossible to fulfill the contract.
A skilled attorney can help you fight against these defenses.
Available Remedies
A breach of contract lawsuit can allow you to recover several types of remedies, including;
Compensatory Damages: These reimburse you for actual financial losses caused by the breach.
Specific Performance: The breaching party is ordered to fulfill its obligations.
Liquidated Damages: Agreed upon in the contract as a reasonable estimation of damages
Consequential Damages: These cover additional losses that go beyond the immediate contract, as long as they were foreseeable.
A breach of contract can be stressful and costly. However, before you sue the violating party, it is crucial to understand the type of breach you are dealing with, your legal options, the steps to take before suing, whether litigation is the best option, and the common defenses to breach of contract claims. At Cali Law, we can guide you through your contract dispute with a tailored strategy. Whether through negotiation, ADR, or litigation, we can work to protect your interests and achieve the best possible outcome. If you are dealing with a breach of contract,contact us today to schedule a consultation and discuss your case.
