Business contracts are a vital part of any successful enterprise. Businesses need to enter into contracts for many reasons. When a contract is in dispute, your business can suffer and litigation may be inevitable. Disputes can take place either in interpreting the terms of a contract, or when one party fails to perform their obligations under the contract. If you are a business owner and have suffered injury because of contract dispute, you should contact an experienced attorney as soon as possible.
At the Law Offices of Steven J. Horn, contract attorneys will help you resolve your dispute and recover the compensation you deserve. If you or your business has been accused of breaching a contract, we will aggressively defend your position and help you eliminate or reduce your liability.
How is a Contract Formed?
A contract may be written, oral or implied (formed by the conduct of the parties), although written contracts are usually the most common in business legal disputes. There are certain elements that have to occur in order for a contract to be formed and become binding. The minimum requirements of a contract include:
- An offer is a written or spoken statement by a party of his or her intention to be held to a commitment upon acceptance of the offer. Often disputes arise because during negotiations one party may believe an offer has been made while the other believed only possible options were being discussed.
- An acceptance is a written or spoken statement accepting the offer, which must be made while the offer is still open (some offers are only for a definite time). Consideration requires that something of value be given in exchange for a performance or a promise of performance (which distinguishes a contract from a gift). Consideration can be money, goods, or a promise to do something that you are not obligated to do, or refraining from doing something that you have a legal right to do. Intent: both parties must have an intention to be bound by the contract and have the mental capacity to understand that they are executing a contract.
When is a Contract Breached?
If one party fails to perform his or her obligations as agreed, a breach of contract exists and that party is said to be in “non-performance.” In order for the non-breaching party to claim damages, he or she must have performed the obligations required of them under the contract or have a valid legal excuse for non-performance.
Defenses to a Breach of Contract
If it is established that a contract exists, there are several defenses that call the validity of the contract into question. These include the following:
- Legality of the contract: A contract is valid only if it is for legal purposes.
- Capacity of the parties: Parties to a contract must be competent to enter into a legal agreement. Underage, mentally ill, and intoxicated persons are usually not bound by the contracts they enter.
- Agency: A business may argue that a contact is not valid because the person who signed the contract for the business was not an agent and did not have the authority to act on the behalf of the business.
- Mistake: A mistake by both parties concerning an important issue of the contract makes it unenforceable.
- Duress: The use of physical force or mental pressure by one party to make the other party agree to the contract makes the contract voidable.
- Fraud: the contract is voidable if there was intentional misrepresentation of an important issue in the contract.
What Damages are Recoverable?
An injured party is entitled to recover the benefits that he or she would have received if the contract had been performed. Remedies include:
- Compensatory damages compensate the injured party for the economic loss caused by the breach of contract.
- Specific performance may awarded when money damages are inadequate, and requires the breaching party to perform his or her obligations under the contract. This remedy is usually available when the contract involves some kind of unique property or other benefits.
- Liquidated damages are damages specified in the written contract and act as an incentive not to break the agreement (they must be reasonable and cannot act as a punishment)
- Attorney fees and legal costs are recoverable if the contract provides for them.
Los Angeles Contract Disputes Attorney
If your business is a party to a contract and there is a dispute concerning the terms or the obligations that must be performed under the contract, it is essential that you contact an attorney as soon as possible. At the Law Offices of Steven J. Horn, experienced business attorneys can provide you with assistance in drafting and negotiating contracts, as well as representing you when a breach of contract has occurred.