Breach of Contract: Elements and Remedies in Business Litigation
Contracts matter. Many significant commercial transactions are based on a contract. When one party fails to uphold their obligations under the bargain-for agreement, they may be held liable on the grounds of breach of contract. What do you need to prove in a breach claim? What remedies are available? Our Pasadena breach of contract attorney answers these questions by providing a comprehensive overview of the elements and remedies for breach of contract claims in California.
Breach of Contract: Defined
As a starting point, it is important to understand what a breach is under California law. The Legal Information Institute explains that a breach of contract occurs when “a party who entered a contract fails to perform their promised obligations.” Notably, a breach of contract can give rise to a civil legal claim whereby the non-breaching party can hold the breaching party liable.
The Elements of a Breach of Contract Claim in California
How do you prove a breach of contract in a business dispute in California? While the specific circumstances always matter, a plaintiff in a claim will generally need to establish the following four elements:
- Contract Formation (Existence of Binding Agreement): The initial element in a breach of contract claim is the establishment of a legally binding agreement. Broadly explained, a contract is a voluntary and lawful agreement between competent parties. It typically requires an offer, acceptance, and consideration—meaning something of value exchanged between parties. California law does not enforce mere promises.
- Performance By Non-Breaching Party (Plaintiff): The plaintiff must have upheld their end of the bargain for a successful claim. Essentially, the party who is alleging the breach must demonstrate they fulfilled their obligations as outlined in the contract.
- Lack of Performance By Breaching Party (Defendant): Another element of a claim involves showing that the other party (defendant) failed to perform their part of the contract. A breach can take many different forms—from a complete failure to perform to unjustifiably delayed performance.
- Damages as Consequence of Breach: Finally, for a breach of contract claim to hold up, there must be provable harm or damages as a result of the breach. The plaintiff needs to show that the defendant’s breach resulted in actual harm to them, which can typically be quantified in monetary terms.
What are the Potential Remedies for a Breach of Contract?
The damage available through a successful claim in California depends on the nature of the breach and the extent of the damages sustained by the non-breaching party. Here is an overview of the potential remedies that may be available:
- Compensatory Damages: Compensatory damages is the primary form of damages in a breach of contract claim in California. Indeed, compensatory damages are far and away the most common type of remedy in these cases. Compensatory damages are intended to put the non-breaching party in the position they would have been in had the contract been performed as agreed. They cover actual losses directly resulting from the breach.
- Liquidated Damages: In some cases, contracts include clauses that specify a predetermined amount of damages in the event of a breach. These are known as liquidated damages, and they are generally enforceable in California if it would be difficult to determine actual damages and the amount is a reasonable estimate of potential damages at the time the contract was formed.
- Specific Performance: While not awarded in every case, a court may order the breaching party to perform their duties as outlined in the contract. This remedy, known as specific performance, is usually reserved for situations where the subject matter of the contract is unique and compensatory damages would not be adequate.
- Contract Rescission or Reformation: Finally, in certain circumstances, a court may rescind (cancel) the contract and restore the parties to their pre-contract positions or reform (modify) the contract to correct mistakes or address fraud or undue influence. This remedy is often used when the contract itself is fundamentally flawed or when it would be unjust to enforce the contract as written.
Contact Our Southern California Breach of Contract Attorney Today
At the Law Offices of Andrew Ritholz, our California business litigation lawyer has extensive experience handling breach of contract claims. Give us a phone call now or contact us online to arrange your completely confidential initial appointment. With an office in Pasadena and an office in Monrovia, we handle breach of contract disputes throughout Southern California.