A contract is an agreement between two or more parties creating mutual obligations that are legally enforceable by law. In order for a contract to be valid, both parties must agree to perform the tasks stated in the contract. A breach of contract occurs when one party to a contract does not perform as promised. If this occurs, the non-breaching party may file a lawsuit and seek legal relief and damages.
In order to file a breach of contract lawsuit, you must follow the rules of civil procedure. The rules of civil procedure sets forth the applicable rules and procedures that parties must follow when filing a civil claim. When deciding where the breach of contract lawsuit should be filed, you should consider the following:
- Venue: Venue refers to the proper judicial district in which to file the lawsuit. Venue is based on where the a substantial part of the claims leading up to the lawsuit took place or where the defendant is located.
- Forum Selection Clause: Parties may agree in a contract which court or sets of law they desire to file the action in the event that a breach of contract lawsuit is filed.
- Statute of Limitations: The statute of limitations refers to the amount of time a party may file an action for a breach of contract case. Each state has a different statute of limitations for breach of contract cases. For example, in Massachusetts and Connecticut, a party has six years to file a breach of contract case.
- Mediation: Mediation refers to the process of both parties hiring a mediator to resolve their differences and offer a mutual compromise. Parties may hire a private mediator or request that a judge mediate the case and offer a compromise.
- Arbitration: Arbitration refers to the process of both parties agreeing to have a neutral arbitrator to settle a dispute. An arbitrator is an independent and neutral person that is appointed to settle a dispute. An arbitrator, unlike a mediator, has the ultimate authority to make a decision about the dispute.
You may file a claim for breach of contract in any court where there is proper jurisdiction and venue, unless the contract otherwise dictates where the claim must be filed. But, if that part of the contract is ruled to be unenforceable, then you may file the action in state court or federal court.
Although you may file a lawsuit in various courts, the laws of certain jurisdiction may be more advantageous over another. Therefore, knowing where you can file the lawsuit could make a profound difference in helping you win your case.
Generally, you may file a lawsuit with a court that is in:
- The defendant’s home state;
- Any state where the court can exercise authority over the defendant;
- The state where the contract was negotiated or signed;
- A federal court if the breach of contract lawsuit involves involves a federal issue;
- A federal court if you and the other party are citizens of different states and the amount in controversy is likely to exceed $75,000.00; and/or
- Any state or federal court where the parties consent to be sued in.
If a defendant is sued for breach of contract, a wide variety of defenses are available for a defendant to assert. The most typical common defenses are listed below.
- The Statute of Frauds requires that certain agreements to be in a signed writing in order for the agreement to be enforceable. For example, all contracts for the sale of land must be in writing and signed by the party to be charged, the defendant. If a plaintiff files a breach of contract lawsuit, the defendant may assert the defense that the contract was required by law to be in a writing and signed by the defendant.
- A defendant may claim that the contract was unenforceable because the plaintiff did not make a valid offer. In order for an offer to be valid;
- The person making the offer must show their intention was to follow the contract;
- The offer must be communicated to the other party to the contract; and
- The offer must contain definite terms such as price, manner of acceptance, and how long the offer is valid.
In addition, a defendant may also claim that the contract terms were unconscionable. An unconscionable contract occurs when the terms of the contract are so unequal as to be against public policy. If one party has more power in the deal and uses that power to make the terms of the contract more difficult to achieve, then the defendant may assert that the contract is invalid.
Yes. Determining jurisdiction and venue are one of the most challenging aspects of civil law. An experienced business attorney can help you assess which court to file in and answer any other question you may have.