In the current difficult economic climate, contract disputes are on the rise, whether related to service contracts, the sale of goods, agreements for the purchase of homes or businesses, residential and commercial leases, employment agreements, partnership agreements and other business venture agreements. Thus, it is more important than ever for the parties to a contract to understand the rights they have under a contract, as well as the obligations they have assumed. As Atlanta business litigation and contract attorneys, McConnell & Sneed have significant experience in representing both individuals and businesses regarding contract disputes, whether seeking to enforce the contract rights of their clients or defending against claims that a contract was breached.
Most simply, a contract is an agreement between two or more parties which defines the rights and obligations of the parties with respect to the matter at issue, such as the purchase of a home or the operation of a business. Generally, in order for a contract to be created, one party must make an offer to do (or not do) something which the other party accepts, with something of value given to support the offer and acceptance.
While many contracts are in writing (in fact, some kinds of contracts are required to be in writing), oral contracts may also be enforceable. Also, depending on the type of contract, the law may impose certain duties on the parties even if the contract does not expressly address them or the parties never discussed them. These are called “implied duties” and can have significant consequences for both parties.
If a party fails to perform its obligations under a contract without a legal excuse, it is called a breach of contract. Depending on the significance of the breach and the terms of the contract, it may excuse the non-breaching party’s obligation to perform under the contract. Also, a party may commit an “anticipatory” breach of contract if, before they are due to perform, they indicate by words or actions that they do not intend to perform as required.
Upon a breach of the contract by one party, the non-breaching party can pursue various remedies. Generally, these remedies may include the following:
(1) Actual Damages - Money to put the non-breaching party in the position he/she expected to be in if the other party had fully performed as required. In some circumstances, instead of being measured by such expectations, actual damages will be the amount expended by the non-breaching party in reliance on the contract or the amount required to restore the non-breaching party to the position he/she was in before the contract.
(2) Consequential and Incidental Damages – In addition to actual damages, money for losses caused by the breach that the parties, at the time of entering the contract, could have reasonably foreseen would arise in the event of a breach.
(3) Attorneys’ Fees and Costs – Potentially recoverable if expressly provided for in the contract or if the breaching party acted in bad faith or was stubbornly litigious.
(4) Liquidated Damages – Money damages agreed to by the parties in the contract that would be payable by the breaching party. These provisions are not always enforceable, however, and must, among other requirements, be a reasonable estimate of the anticipated loss in the event of a breach.
(5) Specific Performance – A court order requiring a party to perform exactly as specified in the contract. This remedy is generally unavailable, however, where a party can be compensated for the breach with money damages as described above. The most common application of this remedy is in contracts for the sale of real estate or other unique property.
(6) Rescission – The contract is canceled and both sides are excused from further performance. The parties would then have the right to seek to be returned to their respective positions before the contract, which could require the restitution of any money or benefits advanced from one party to the other.
If you believe you have been harmed by a breach of contract, it is important to consult with an attorney to understand what remedies may be available to you. Likewise, if you have been accused of breaching a contract, it is critical that you know what defenses you may have to any claimed liability and if you have any counterclaims for damages against the other party. The attorneys at McConnell & Sneed have the knowledge and experience to advise you on these issues and will aggressively represent your interests in any contract dispute.