What is a Contract?

A contract is any agreement made between two or more people. The agreement is usually documented in paper and signed, but it is sometimes oral. Oral contracts are slightly more difficult to prove in court, because of evidentiary difficulties. The historic intent of the law in contracts is to give effect to the intent of all parties to a contract. The intent of the parties, whether written or unwritten, are the real terms of the contract. If there is a disconnect between the written terms and the evident intent of the parties, courts may ignore the written terms in favor of the way the parties have been conducted themselves in their course of dealing.

Breach of Contract

When a contract term, either express or implied, is breached (broken), the injured party may bring a civil suit. The usual remedy is money damages, but a court may also order specific performance, rescission or reformation of the contract. The money damages are measured by (1) the injured party’s direct loss, and (2) indirect loss, if it was reasonably foreseeable by both parties at the time of the contract.

Two Common Types of Breach of Contract

Breach of Employment Contract

One of the most common contracts to which people agree are employment contracts. Most breaches of contract in the employment context are handled by mediation or employment tribunals. If an employee brings a breach of contract before a civil court, the employer may bring counterclaims, so potential plaintiffs should be certain that they are not at fault for the situation. Most questions about whether an employer has breached a contract can be answered by going back and reading the employment contract. If the case involves workplace discrimination, the injured party must first file their case with the federal EEOC or the equivalent state office. The government office will respond to the case by taking up the cause or giving a “right to sue” letter. This is a necessary step before filing a lawsuit for discrimination.

Breach of Contract in Construction

Another of the most common contracts to which people agree are with contractors. If a contractor has not performed the desired work to specification, an action can be brought against him for breach of contract. A court will be very concerned with whether the non-performance constitutes a material breach or partial breach. A partial breach is a minor non-performance, which does not deprive the injured party of the benefit which was expected. For example, if the contractor installed red pipes instead of blue pipes, a court would not find a material breach, because the benefit of functionality has not been destroyed. The damages available to a party injured by a partial breach is usually the difference in value between the work expected and the work completed. The damages for a material breach is usually the cost of correcting the breach, which is usually much higher than the difference in value. If the damages are less than $7,500, the injured party should usually pursue the matter in small claims court.

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