The Elements of Breach Of Contract
Breaching a contract occurs when a valid contract is not completed. There must be a valid contract, complete performance by the complaining party, and failure by the other party in its performance under the contract. Once the contract is breached, the complaining party must prove her damages. If a party breaches a contract, the complaining party may recover compensatory, expected, or consequential damages, request specific performance, restitution, rescission, reformation, or nominal damage.
Anticipatory Repudiation or Breach
If one party advises the other party that they won’t be able to honor the contract within the contractual time period, an anticipatory breach occurs. When it does, the non-breaching party can sue immediately before the contractual deadline. They typically must make attempts to mitigate their losses, affirm and reconfirm the contract or rescind and look for damages. If pursuing damages, the aggrieved party can seek expected, consequential, incidental, or reliance damages. A court may also order specific performance forcing the party who breached fulfill her obligations under the contract.
Breach of Contract Defenses
Several defenses for a breach of a contract action are available to a breaching party. For example, if an oral contract was entered into in a real estate purchase which needs to be in writing under the “Statute of Frauds,” the contract could be terminated. In an indefinite contract defense the breaching party must show that certain important terms were never agreed to. When this happens, the contract was never finalized and the court can not decide on the essential terms of the contract. The defense of mutual mistake is available when the parties make a mistake on an essential contract term. Lack of consent or fraudulent inducement can also negate the contract. If the contract is unfair or oppressive and unconscionable, this defense can end the contract. An estoppel defense is available if the parties have a different understanding of the contract. If the end result of the contract is illegal, the breaching party may use it as a defense.
Damages in Breach Of Contract Cases
In a breach of a contract case, the injured party can seek both general and specific compensatory damages. This gives the non-breaching party the direct losses incurred. These damages seek to put the party in the same position as if the contract were completed. Costs are also recoverable by the non-breaching party under reliance damages. This damage allows the party to recover her costs based on her reliance on the other party’s performance. Under restitution, the non-breaching party can recover the gains that the breaching party received. In a specific performance action, the court can require the breaching party to complete all the conditions under the contract. A liquidated money damage award under the contract will be given to the non-breaching party as outlined in the contract. Rescission allows the cancellation of the contract. This damage puts the parties back in their pre-contract position. Finally, an injunctive order will permit or prevent certain actions.
Statute of Limitations in Breach of Contract Lawsuits
As with all legal claims, they must be brought within a certain timeframe. This is referred to as a statute of limitations. On June 16th, 2021, Ohio Revised Code 2305.07 reduced the statute of limitations for breach of a written contract from eight years to six years. On that same date, breach of an oral contract was reduced from six years to four years. The time under the statute of limitations begins to run when the breach occurs.
Dennis P. Sawan
