In short, a contract is a legal document that details an agreement between involved parties. This document creates a legal obligation for both parties to perform specific actions. Valid contracts prove that:
- There was mutual assent between the parties, in regards to the terms of the performance;
- An offer was made by one side and that offer was accepted by the other; and>
- A mutual exchange of consideration (or value) in order to bind the parties to the agreement.
If one or more parties to the contract cannot or will not perform their agreed to duties under the contract, it is considered to be a breach of contract. A party may breach a contract by failing to meet a specific time constraint, by failing to perform entirely, or by only providing a partial performance. When a party does not do what they agreed to as specified in the contract, the non-breaching party is allowed to take legal action against them and sue them in court.
Breaches of contract may be designated as either partial or complete breaches. Partial breaches do not affect how the rest of the contract may be carried out, whereas a complete breach renders the contract entirely useless. A court can assess whether a specific breach was minor, or substantial.
What Damages are Available for a Breach of Contract?
Breaching a contract could entitle the non-breaching party to recover legal damages. These damages may be compensatory, consequential, or liquidated damages to name a few. Damages may also be equitable remedies, such as canceling the remainder of the contract.
The specific type of remedy that the non-breaching party may be entitled to will largely be determined by the severity of the breach of contract, as well as the damage done by the breaching party.
Compensatory damages are the most commonly awarded in suits involving breach of contract. This remedy is intended to compensate the injured party for losses suffered as a result of the breach. An example of this would be if someone hires a caterer to provide meals for a large party for the price of $1,000, and they pay this fee to the caterer. However, before the party, the caterer informs them that they are unable to provide the meals on the date of the party.
The party’s organizer must then hire a new caterer at $1,500. The first caterer may be ordered to pay $1,500 to the non-breaching party in order to reimburse them for the additional fee incurred due to the original caterer failing to fulfill their part of the agreement.
Restitution may be ordered so the breaching party must pay the injured party back, with the intent to restore the injured party to the position they were in prior to the breach. These damages do not generally include lost profits or earnings caused by the breach of contract.
Some other types of damages include punitive damages, which are intended to punish the breaching party for their breach, and remedies in equity. This occurs when a court orders a party to do something as opposed to paying out monetary damages.
However, if the plaintiff takes too long to file their lawsuit, the defendant may be able to assert that they, the breaching party, actually suffered some type of harm or prejudice. The breaching party may then seek to prevent the plaintiff from filing the lawsuit, which is known as estoppel by laches. This legal defense is only available if the plaintiff is seeking an equitable remedy, such as restitution.
The general rule in most American states is that each party pays for their own attorney’s fees. However, there are a few exceptions which will be further discussed below. If you are the prevailing party in a lawsuit regarding a breach of contract, you may be able to recover attorney’s fees.
Are Attorney Fees Considered Damages in a Breach of Contract?
Whether attorney fees will be considered damages in a breach of contract lawsuit depends on the terms of the contract. Attorney fees provisions can often ensure that the parties work in good faith towards resolving any disputes before they result in litigation.
The contract should explicitly state how to quantify attorney fees; if it does not, the court will determine the number. Additionally, the contract should also require that the breaching party receive notice of the intention to collect attorney fees and other damages as a result of the breach. Some state have statutes allowing for the award of attorney fees to the prevailing party based on:
- The type of case;
- The seriousness of the violation;
- The reasonableness of the fees; and/or
- The discretion of the court.
Under such statutes, the parties do not have any control over who is considered to be the prevailing party. As such, it is best to include an attorney fees provision in the contract instead of relying on the state’s statute.
It is important to note that in some states, such as Texas, attorney fees may be automatic for successful plaintiffs in breach of contract cases. In fact, the Texas Civil Practice and Remedies Code specifically states that an individual may recover attorney’s fees from another individual or a corporation for breach of oral or written contracts.
It is important to research your local jurisdiction’s law in order to determine whether or not attorney fees are allowed or automatic under a specific statute, or whether they are only allowed if covered in a clause within the original contract.
How Can I Get My Attorney Fees Paid For in a Breach of Contract Claim?
It is important that in your initial complaint to the Court, that you specifically request for attorney fees. For example, in a breach of contract action against an individual, you would include a request that the Court grant you a judgment in the amount of your attorney’s fees as a result of you having to hire an attorney to pursue an action against the breaching party.
If the original contract had a clause within the contract that specified attorney’s fees were to be awarded against the non breaching party upon a breach of contract, then it is important to both reference that clause and include a copy of that clause as an attachment to your complaint. Then, the Court will be able to ensure that attorney fees are awarded in addition to any damages proven by the plaintiff.
Do I Need a Lawyer If I Am Facing a Breach of Contract?
If you are involved in a breach of contract dispute, you should consult with a skilled and knowledgeable contract attorney. An experienced business attorney can review your contract and advise you on how best to proceed in recovering damages.
Additionally, the attorney can file a lawsuit on your behalf against the breaching party, as well as represent you in court as needed. If you are the breaching party, then an attorney may also assist you in asserting a legal defense, if available, and protect your interests.