A contract is an agreement between two parties which creates mutual legal obligations. Contracts may be either in oral or written form.
It is important to note that oral contracts are more challenging to enforce than written contracts and should be avoided whenever possible. There are certain types of contracts which are required to be in writing to be valid, including contracts involving a significant amount of money, over $500.
It is crucial to have an understanding of the rules governing contracts because they are involved in most individual’s everyday dealings. Contracts must contain certain elements in order go be valid and enforceable, including:
- An offer;
- An acceptance of the offer presented; and
- Valuable consideration.
There are also other provisions which contracts should contain, including:
- A time or an event of when the performance must be made;
- Terms and conditions for the performance; and
- Performance.
As noted above, certain contracts are required to be in writing in order to be enforced by a court. These types of contracts are governed by the Statute of Frauds.
Contracts which are governed by the Statute of Frauds include:
- Marriage contracts;
- Contracts which are not going to be performed within one year;
- Interest in land contracts;
- Contracts to pay a decedent’s debt; and
- Contracts for the sale of goods over a specific amount.
The majority of contracts are governed by the statutes of the state in which they are formed so it is important to consider local laws when addressing a contract issue.
What are the Required Elements for a Contract?
There are several requirements for contracts. A contract is required to have a legal purpose and cannot have an illegal one.
For example, a contract to commit a crime, like hiring a hitman, is not a valid contract. There must also be mutual agreement between the parties.
This agreement is also referred to as the meeting of the minds. For example, when the contract is signed it shows that there was mutual agreement between those parties and that they are all on the same page.
In some cases, an offer may not have an expiration period and will remain open for a reasonable time. An offer may be revoked any time until acceptance occurs.
Acceptance typically means agreeing to the terms of the offer. If any changes are made to the terms of the acceptance, it would be considered a counteroffer.
This rule may differ across states so it is important to review the regulations in the jurisdiction where the contract was formed. Consideration is essential in order for a contract to be valid.
Consideration is something of value that is provided in exchange for a benefit. Consideration must be something of actual value and may include things such as:
- A vehicle;
- Money; or
- Manual labor.
It is important to note that there are differences between promises and gifts. For example, if an individual gave another individual a purse, that would not be considered a contract. If, however, the purse was promised in exchange for a service, such as cleaning the gutters, it would be considered a contract.
The parties to a contract must also be legally competent. Mentally impaired individuals and minors cannot enter into contracts.
In addition, the parties who are contracting must be of sound mind and not be under the influence of alcohol or drugs at the time the contract is formed. Contracts may be deemed void if there is:
- A mistake;
- Duress; or
- Fraud by one or more parties.
What is Considered a Breach of a Contract?
If either party to a contract fails to fulfill their obligations under that contract, then the party has breached the contract. If one of the parties violates the contract, it may cause the other party to suffer economic losses.
For example, if an individual hires a construction company to complete a project by a specific deadline and the company fails to do so, the individual who hired them will likely suffer financial losses because of the company’s failure to complete the project on time.
What is Laches in a Breach of Contract Claim?
Laches is a defense which is available in certain breach of contract claims. The concept of laches is that a plaintiff, or injured party, cannot recover for a breach of contract if they delay too long in filing their lawsuit.
To prove laches, a defendant must show that the plaintiff’s delay in filing their lawsuit was unreasonable and that delay resulted in prejudice or negative effects upon the defendant. Therefore, the defendant must be able to show that they experienced some type of loss as a result of the plaintiff delaying filing their lawsuit.
For example, if the plaintiff’s delay causes the defendant to lose a significant amount of business, they may be able to raise the defense of laches.
When is Laches Applicable?
Laches is considered an equitable defense which means that the defendant can only raise a laches defense if the plaintiff is seeking an equitable remedy. Equitable remedies are those that do not involve the plaintiff receiving a monetary damages award, or financial compensation.
Examples of equitable remedies to which laches may apply include:
- Specific performance, which is a remedy where the breaching party is required to fulfill their contractual duties and obligations;
- Contract rescission, which is where the old contract is canceled, or rescinded. The parties are permitted to form a new contract in place of the old one. Laches would prevent the plaintiff from claiming contract rescission as a remedy; and
- Contract reformation, which is where a court allows the parties to rewrite the portion of the contract which is in dispute.
If a non-breaching plaintiff is seeking equitable relief in their lawsuit, the defendant should check to see whether or not the case was filed in a timely manner. If not, the defendant may be able to use laches as a defense if the delay resulted in prejudice against them.
It is important to note that laches may also be applicable in other areas of law, including personal injury cases.
How does Laches Apply to the Statute of Limitations?
In general, a statute of limitations is the amount of time which a plaintiff has to file their lawsuit. The statute of limitations is different depending upon the type of case.
For example, the time period may range from 6 months to 2 years, depending on the type of legal claim. If the statute of limitations expires, the plaintiff can no longer file their lawsuit.
Laches, on the other hand, has more to do with whether the delay by the plaintiff negatively affected the defendant instead of a certain time frame. Therefore, laches may be claimed even when a plaintiff files their lawsuit within the time frame that is set by the statute of limitations.
It is important to note that any unreasonable delays that occur once litigation has started may also trigger a laches defense.
Do I Need a Lawyer if I Have a Legal Claim Involving Laches?
When raised correctly, laches can be a powerful defense. If you have any issues, questions, or concerns related to laches, you should consult with an experienced contract attorney in your area.
Your attorney will be able to assist you if you are involved in a breach of contract claim, whether you are the plaintiff or the defendant. Because contract laws vary by state, it is important to have your attorney explain the laws which apply to your contract and to represent you in court during the lawsuit.
