What is a breach of contract?
A breach of contract is when one of the parties that signed the contract fails to hold up their end of the bargain. We enter into a number of contracts each and every day. Contracts get formed on a regular basis, and they do not need to be written or signed by both parties in order to create a legal contract.
For example, if you pay for a ticket at a movie, the theater is required to give you a seat to the show, otherwise the movie theater has breached the contract formed when you place an order at their box office.
Similarly, when you pay your mortgage or your credit card bill, you’re holding up your end of the contract. You’re probably involved in a bunch of contracts at the moment, but what happens when you or the other party fails to hold up their end of the bargain?
That’s the focus of today’s blog on the basics of breach of contract laws in Illinois.
What types of Contracts Can You Sue Over?
A thorough list of all business and commercial contracts would take up numerous volumes of writing.
However, we have observed some contract types that are commonly used in business breach of contract claims:
- Employment contracts: employee or independent contractor agreements, non-compete agreements, non-solicitation agreements, trade secret disputes.
- Commercial contracts: purchase and sales agreements, vendor agreements, trade agreements, supply contracts, parts contracts.
- Service contracts: construction contracts, utility contracts.
- Real estate contracts: real property sales contracts, lease agreements.
- Business contracts: partnership agreements, business sales and merger agreements, investment and capital agreements, joint venture agreements, franchise agreements, disputes over fair market value.
Contract Formation Overview
Under Illinois law, a contract is formed when three conditions are met. Those conditions are:
- An Offer By One Party
- An Acceptance By A Second Party
- A “Consideration” That Is Exchanged (Money For Goods Or Services, Etc.)
If these conditions are met, it can be assumed that a legal contract has been formed.
The contract does not need to be drafted and then signed by both parties in order to be valid, although it’s much easier to prove the other party did not hold up their end of the bargain if you have a written agreement on the exact exchange of considerations.
Suing for a Breach of Contract
Let’s keep it really simple: Contract + Breach + Lawyer = lawsuit for a breach of contract. Consult with a litigation attorney over your contract that you believe is breached. Some breach of contract actions are very straightforward.
For example, a loan that has not been paid is a simple contract breach. Some contracts are very complex and alleging a breach must be done in good faith in order to sue in court.
You should also get a receipt or draw up a contract for serious matters. A contract is said to be breached if one party fails to provide their consideration.
If you believe someone has breached a contract with you, you’ll have to prove three factors exist.
You need to prove that all three of these factors exist in order to have a valid claim. They are:
- A Legal Contract Exists
- One Party Failed To Live Up To Their End Of The Bargain
- One Party Suffered Damages As A Result Of Breached Contract
What is the Definition of Breach of Contract?
A “breach of contract” is a legal term referring to a breach of a contract or agreement when one party fails to fulfill its obligations in accordance with the agreement’s terms.
It can sometimes include interfering with another party’s capacity to carry out his responsibilities. A contract might be broken whole or partially.
Most contracts come to an end after both parties have completed their contractual responsibilities, but often one party to fall short of their contractual commitments.
You’ll see the following patterns for breach of contract actions.
- failing to perform
- anticipatory breach
- suing for breach
- breach of contract case
- breach of contract occurs
- material breach
- small claims court
- type of breach
Contract Lawsuit Conclusion
In other terms, a breach of contract happens when one of the parties fails in holding their end of the bargain, leaving the other one, who performed its obligation, without the promised benefit.
And as the nonbreaching part of the contract you have the right to file a lawsuit against the non-performing party.
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General Requirements for a Breach of Contract Lawsuit
The judge generally will have seven questions about the suit:
- Was the contract valid?
- What did the contract require of the parties?
- Was it modified?
- Has the plaintiff demonstrated a breach?
- Was the breach material to the contract?
- Is the breaching party legally allowed to not abide by the contract?
- Were there damages?1
Because state laws differ greatly, there may be additional things to consider depending on where you are. Before taking any legal action, consult with an attorney to assess your situation.
How do I file a Breach of Contract Lawsuit?
The first thing you need to make sure is that you have a legally binding contract, whereof which one party failed to hold their end of the bargain, making the other or others suffer damages as a result of the “default.”consequence. Once you are sure the contract was breached you should:
- Re-Read The Contract: Contracts Usually Have Sections That Discuss What The Parties Can Do In The Event Of A Breach. For Example, The Contract May Establish A Certain Time Frame In Which The Party Can Fix The Issue Before The Other Is Permitted To File A Lawsuit. Or They Could Also Dictate What Methods Measure The Parties Agreed Settle On Using In Case Of A Breach Of Contract, For Instance It Could Say The Parties Should Resolve Their Disputes Using Mediation Or Arbitration Exclusively.
- Look For The Four Main Elements To The Breach Of Contract And Start Preparing A Way To Prove Them:
- The Presence Of A Contract Considered Valid In Accordance To Law
- The Evidence Of Performance By The Non-Breaching Party Of Their Upheld End Of The Bargain Beside Not Being Mutual.
- Proof Of A Substantial Violation Of The Terms Of The Contract. Minor Errors Generally Don’t Qualify For Breach Of Contract Terms
- Lastly, Take Into Consideration That Damages Are A Crucial Part Of A Breach Of Contract Lawsuit And Therefore You Must Be Able To Demonstrate They Exist And Were Caused Exclusively By The Breach.
- Now You Can File A Breach Of The Contract Claim In The Appropriate Court, Which Is Often:
- Where The Defendant Resides,
- Where Its Registered Agent Is In Case Of A Business, Or
- Where The Transaction Occurred..
You should consult with a local contract litigation attorney who will be able to provide specific legal advice.
Breach of Contract Defenses
The defendant (the party being sued) has a legal right to explain why the claimed breach isn’t actually a breach of contract or why the breach should be forgiven, just like in any other litigation. This is referred to as a defense in legal jargon. The following are five frequent contract breach defenses.
This is defined as “knowingly misrepresenting the truth or concealing a crucial fact in order to persuade someone to behave against his or her own interests.” When a defendant asserts this defense, they are claiming that the contract is void because the plaintiff omitted to disclose relevant information or made a false statement regarding a major or crucial fact. The defendant must show that the deception was intentional.
When one person uses physical force or other threats to convince another to sign a contract, this is known as duress. This, too, can render a contract void because neither party signed voluntarily, which is a typical contractual requirement.
This is similar to duress. It means that one party had a power advantage over the other and that they used that advantage to force the other to sign the contract.
A defendant’s mistake will not invalidate a contract or dismiss a breach of contract action, but if the defendant can show that both parties made a mistake concerning the subject matter, it may be enough to void the contract and serve as a defense.
Statute of Limitations
Many lawsuits have statutory time restrictions, or deadlines by which they must file the action in court before a specific date. If the defendant can establish that the statute of limitations has run out, a breach of contract lawsuit is often dismissed. Individual state laws determine the statute of limitations, therefore please check your state’s statute of limitation on contract actions. A formal contract statute of limitations usually lasts three to ten years on average.
Remedies for a Breach of Contract Lawsuit
When a person or a company breaks a contract, the other party to the agreement becomes entitled to legal redress (or “remedy”). The following are the most common remedies for a contract breach:
- Specific Performance
- Cancellation and Restitution
The payment of damages — payment in one form or another — is the most common remedy for a breach of contract. There are many kinds of damages, including the following:
- Compensatory damages Attempt to place the non-breaching party in the same position as if the breach had not happened.
- Punitive damages are payments that the breaching party is required to provide in excess of what would completely compensate the non-breaching party. Punitive damages are intended to penalize a wrongdoer for extremely egregious behavior, and they are rarely given in commercial contracts.
- Nominal damages are small amounts of money given when a breach occurs but no actual financial loss to the non-breaching party is proven.
- Liquidated damages are specific damages set by the parties in the terms and conditions of the contract itself.
If damages are insufficient as a legal remedy, the non-breaching party may seek particular performance as an alternative. The violating party’s court-ordered fulfilment of contract obligations is specific performance.
If the subject matter of the agreement is unusual or unique, and damages are not sufficient to put the non-breaching party in the same position as had the breach not happened, specific performance is the right remedy for such breach of contract actions.
Cancellation and Restitution
If the non-breaching party has provided a benefit to the breaching party, the non-breaching party may dissolve the contract and claim for restitution.
As a contract remedy, “restitution” involves putting the non-breaching party back in the position it was in previous to the breach, whereas “cancellation” means voiding the contract and relieving all parties of all obligations under it.
Where can I file a Breach of contract Lawsuit?
You may file a claim for breach of contract in any court where there is proper jurisdiction and venue, unless the contract otherwise dictates the venue in which the claim is proper. Take into consideration that laws may be more beneficial for your position depending on the jurisdiction, so having a lawyer that knows where to file your lawsuit could determine completely if you win or lose your case.
When can I file a Breach of Contract Lawsuit?
Statute of Limitations limits and states the maximum amount of time to file civil actions in a court of law. The state of Illinois establishes for breach of contract law a maximum of 10 years for written contracts, 5 years maximum for oral contracts, and for certain sales contracts a shorter limit of 4 years.
You may ask yourself: When does the countdown start? The general rule is that it starts running the moment the breach happened. Meaning the day the violation of the terms occur, in case the general rules does not apply to your case your lawyer will know how to guide you.
Do I need a lawyer to file a Breach of Contract Lawsuit?
There is only so much you can learn from the internet. As much as it is important for you to research your case and learn about your options, an experienced prepared lawyer could give you an estimate on your lawsuit determine the destiny of your suit.
Not only will your lawyer help you prepare your case and represent you in court, they could assist you in mediation and arbitration procedures, and their years of experience will allow you not to worry about the most challenging aspects of the contract law. If you are looking for a Breach Contract Law Attorney do not hesitate to contact us.
Should I file a Breach of a contract lawsuit ?
If you are uncertain whether initiating a lawsuit for the breach of you contract or not, don’t forget to think of:
- The Amount In Controversy – More Money Means More Likely To Sue
- The Ability To Collect On The Judgment.
- The Ruling In Your Favor Would Mean The Breaching Party Will Have To Honor Your Commitment.
- The Damage Done To You Is Monetary. You Should Not Be Responsible For Repairing The Losses Caused By A Breach Contract You Complied To.
- Damages May Include Lost Profits. You Should Also Take Into Consideration The Profits That You Lost During The Time If The Damaging Occurred
Don’t forget successful businesses maintain their success by protecting their interests. Not taking action when a violation of an agreement happens and damage has happened to you or your business will never result in a favorable outcome. With specialized legal advice you will be provided with all your options and guided in the best way through the process.
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