A contract, which may be in an oral or a written form, is formed when two parties enter into an agreement which creates mutual legal obligations. It is important to note that oral contracts are more challenging to enforce than written contracts and should be avoided when possible.
There are some contracts which are required to be in writing in order to be valid. These include contracts which involve a substantial amount of money, over $500.
Most individuals encounter contracts in everyday dealings in most aspects of their lives. There are certain elements that a contract must include in order to be enforced, including:
- An offer;
- And acceptance of the offer that was presented;
- A promise or promises to perform;
- Valuable consideration;
- An event or time that marks when the performance must be made;
- Terms and conditions for the performance; and
In addition, a court will not enforce certain contracts unless they are in writing because they fall under the Statute of Frauds, which requires the contract to be in writing. Contracts governed by the Statute of Frauds include:
- Marriage contracts;
- Contracts that will not be performed within one year;
- Interest in land contracts;
- Contracts guaranteeing the payment of a decedent’s debt; and
- Contracts that are for the sale of goods over a certain amount.
The majority of contracts are governed by state statutes. Because of this, it is important for an individual to consider the laws of the state when handling a contract issue.
What are the Different Types of Contracts?
Unilateral contracts involve promises in exchange for specific performance. Bilateral contracts involve a promise in exchange for a promise.
Other common types of contracts an individual may encounter include:
- Express contracts, which typically specify orally or in writing the exact terms of the contract;
- Conditional contracts, which are based upon a completion of a condition;
- Joint and several contracts, which are contracts that has multiple parties involved;
- Implied contracts, which arise when courts finds that a contract exists based on the situation;
- Unconscionable contracts, which put one party at a greater advantage than another one and are considered unjust;
- Adhesion contracts, which are considered to give one party more bargaining power than another and therefore result in a take it or leave it situation;
- Option contracts, which allow a party to enter to another contract with another party at a later time; and
- Fixed prices contracts, which involve a buyer and a seller who agree to pay a fixed price for a project.
It is important to be aware that contracts may come in numerous forms and are something that most individuals encounter every day. If an individual is unsure what type of contract they are involved in, it may be helpful to consult with a local attorney to determine the facts surrounding the contract.
What are the Ways You Can Breach a Contract?
There are three main categories of ways in which a party may be held liable for a breach of contract, including:
- There is an anticipatory breach;
- A party commits a minor breach; and
- A material or fundamental breach occurs.
Anticipatory breach is often referred to as anticipatory repudiation. This category of breach occurs when the breaching party tells the non-breaching party that they will not be fulfilling the terms of their contract. Once the non-breaching party is notified, they can sue for breach of contract.
A minor breach of contract occurs when one party fails to perform a detail required by the contract. In this case, the entire contract has not been violated and may still be substantially performed. Minor breaches also arise then comes up when there is a technical error with the contract, such as:
- An incorrect date;
- An incorrect price; or
- A typo within the terms of the contract.
Material or fundamental breaches are the most common types of breaches which are cited as the basis for breach of contract actions. These occur when a breach is so substantial that it, in effect, cancels the entire contract because it renders performance by either party impossible.
There are also other ways in which a contract may be breached, including:
- When a contract is fraudulent;
- If the contract was illegally formed or is unconscionable; and
- A mistake of fact is present in the contract terms.
The parties may also include conditions in their contract which are unique to their particular situation and will specify when the actions of a party can be considered to be a breach. In addition, the laws of the state as well as the type of contract, for example, a lease agreement, a sales contract, or a government contract, may indicate other ways in which the contract may be breached.
There are several legal options which may be available to compensate a party for their losses associated with a breach of contract. A party may:
- Sue for damages;
- Demand specific performance; or
- Terminate the contract.
Can I Sue Someone who Interfered with my Contract?
If an individual had a contract with another party and that party caused a breach of the contract, the individual may be able to sue the third-party for interference with economic advantage. This means that the third party engaged in an action which messed up the contract and caused a party to lose money or to suffer some form of economic damage.
This claim can be difficult to prove. A court will examine the specific facts and circumstances of the case if the claim meets the elements to show a cause of action for interference with economic advantage.
If the non-breaching party prevails, there are a few legal remedies that are available. For more information on related issues, see the LegalMatch articles below:
How can I Prove Interference with Economic Advantage?
Although the tort of interference with economic advantage may differ slightly between states, an individual generally has to allege and, ultimately, show the following elements to prove interference with economic advantage:
- There was a valid economic opportunity or existing contract. Keep in mind, there may be an obstacle proving that there was a valid economic opportunity if there was no written contract or hard evidence of the agreement;
- The third-party had knowledge of the economic opportunity;
- The third-party intentionally interfered with the contract. Whether the interference is intentional will depend upon the circumstances of the case and interpretation of the facts.
- Some states may require that the third-party maliciously interfered with the contract or even used illegal means to interfere with it;
- The contract is breached; and
- The interference by the third party caused the party harm. Linking the third-party’s action to the resulting harm is usually the hardest thing to prove. If this is not proved, the non-breaching party will not have a case, even if the other elements are met. In general, the following will be analyzed when determining causation:
- Did the third-party take active steps to induce the breach?; and
- If so, would the contract still have been performed if the third-party did not interfere?
What Remedies are Available?
If a non-breaching party prevails in their claim for interference with economic advantage, the following tort remedies may be available:
Should I Contact an Attorney?
Because a case of interference with economic advantage can be very difficult to prove and the laws governing contracts and related issues may vary from state to state, it may be in your best interest to consult with a local business attorney. Your attorney will be able to evaluate your case and determine whether you may have a claim for interference with economic advantage or any other cause of action.
If you do have a claim, your attorney will assist you throughout the process, including representing you in court, and help to ensure that you obtain the best possible compensation for your losses.