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What Constitutes a Breach of Contract?

A contract is an agreement between two or more parties. In order for a contract to be legally enforceable, it must comprise: 1) an offer; 2) acceptance of the offer; and 3) valid consideration. In the business context, parties often enter contracts to buy and sell goods and supplies, for employment, to lease commercial space, and for other services related to business operation.

If you engage in business regularly, you are probably aware that sometimes one or the other of the parties to a contract fails to live up to his or her end of the bargain. When such a situation arises, it may be necessary to sue for breach of contract.

Express Contracts

Generally speaking, express contracts are written. In such cases, the written terms of the agreement will be the starting point for any dispute. While certain oral contracts may be deemed valid by the courts, some must be in writing to be enforceable.

Written and Oral Contracts

The primary difference between oral and written breach of contract disputes is the time of enforcement, known as the statute of limitations. One must file a claim for breach of contract of a written agreement within four years. Oral contracts are subject to a two year statute of limitations.

Implied Contracts

If both parties agree to the nature of factual evidence and what is expected of them, the terms of the contract may be enforced despite the lack of a written agreement.

Seeking Damages

If someone else has breached a contract with you, a business attorney can assist in obtaining compensation on your behalf for any financial losses you suffered. Such a lawsuit is referred to as a tort. For example, if you are an owner of commercial real estate who leases the property to a business tenant for a period of 5 years, and the tenant abandons the premises after only two years, you can seek compensation from the tenant for the three years of rent payments you lost due to the breach.

A tort also allows recovery for “general damages” such as pain and suffering and emotional distress. Contract damages typically limit the claimant to the “benefit of the bargain” that would have been obtained had the contract been performed.

The consequences of a breach of contract are determined by the specific circumstances of each situation.

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