The legal elements of a valid contract are an offer, an acceptance, and consideration. Consideration is something of value that is exchanged for another or for performance of the contract. A breach of contract occurs when a party to the contract fails to perform the promises in the contract according to the terms of the agreement.
Proving Breach of Contract in New Jersey
The party who filed a breach of contract lawsuit has the burden of proof. An attorney can help present favorable evidence in court to demonstrate that the client substantially complied with the terms of the agreement and the other party should be held liable for any breach. The plaintiff must also prove the amount and type of damages that resulted from the breach.
Some of the most important evidence that can be used in court is the contract itself and the testimony of the parties involved in the dispute. If one of the parties was a corporation, an authorized agent for the company may be called to testify in court. Other documents such as photographs, business records emails, invoices, and letters may be presented.
It is important to consult an attorney as soon as possible if you believe that you may become involved in a breach of contract case. Records that are ordinarily destroyed during the course of business should not be destroyed if they may become the subject of the litigation.
The statute of limitations for filing a lawsuit for breach of contract in New Jersey is four to six years depending on the subject matter of the contract. Breach of contract cases involving non-sales disputes and fraud claims must be filed within six years, while a breach of contract claim involving the sale of goods must be filed within four years. Failure to file the claim in time may result in dismissal.
Many contracts involve purchase agreements. For example, if a certain number of widgets were supposed to be delivered to a business at a specific time, failure to deliver the widgets on time or delivery of the wrong type or number would likely constitute a breach.
Litigation over breach of employment contracts. This would include restrictive covenants such as non-competes, confidentiality, and non-solicitation agreements.
Counterclaims and Defenses
If one party sues for breach of contract, it is not unusual for the other side to file a counterclaim. For example, if one party does not pay the other as agreed, a lawsuit may be filed and served on the non-paying party. The other side may sue for breach of contract alleging that the counterclaiming- defendant did not perform all work as agreed.
Parties who have been served with a complaint alleging breach of contract must file an answer within the time specified in the summons served with the complaint. Failure to file an answer may result in the answer being stricken from the record and a default judgment being entered in favor of the plaintiff.
Here are several common defenses to a breach of contract claim:
- Wrong venue – If a party files a claim in the wrong court, it may be dismissed.
- Fraud or duress – If a party entered into a contract because the other party lied about the nature of the contract or threatened them with harm if they refused to sign the contract, this may constitute a defense for breach of contract.
- Mistake – If both parties were mistaken about a fact concerning the contract, such as the authenticity of a painting, this may be a defense to breach of contract.
- Lack of capacity to enter into the contract – If a party is incapacitated due to a mental disability or intoxication or is not old enough to enter into a contract, this may be a defense for breach of contract.
- Illegal contract – Courts will not enforce an agreement for performance of illegal actions.
- Unconscionable contract – If the terms of the contract are so unfair to one party that it would be unjust to enforce it or award damages, the unfair terms or the entire contract may be stricken.
The way that any disputes arising from a contract are handled is best controlled by the terms of the contract. For example, some contracts contain a venue-selection clause specifying any lawsuit must be filed in a particular state. Any lawsuits filed in another state may be dismissed because they were filed in the wrong court.
Some contracts specify that the parties must attend arbitration rather than filing a lawsuit in state court. If a contract has an arbitration clause, the contract should also specify where and how arbitration will take place.
Mediation is an option that encourages parties to settle a case outside the courtroom. During mediation, the parties will sit down with their attorneys and try to work out a resolution that is fair. A mediator assists the parties with the negotiation process. If the parties are able to reach an agreement regarding settlement, the breach of contract case may be dismissed.
If a judge finds that a breach of contract occurred, the judge has a choice to award several different remedies including the following:
- Specific performance (or fulfillment of the terms of the agreement)
A judge may order performance of the contract. In some cases, this may be the best resolution if the damages for the breach of contract are difficult to calculate due to the unique nature of the service or items that are the subject of the contract or if the defendant is the only party who is able to carry out the terms of the contract.
A judge or jury may award damages for the amount of actual economic losses suffered by a party to a contract. This may include money paid to the defendant as part of the agreement and business losses suffered because of the defendant's nonperformance.
In some cases, a judge or jury may award punitive damages if the defendant's conduct was especially egregious. Punitive damages are awarded to discourage other parties from engaging in similar conduct. Attorney's fees and court costs may be awarded, and many contracts contain provisions specifically allowing attorney's fees to be awarded in the event of a dispute.
Cancellation and Restitution
In some cases, a party to a contract may cancel the contract and sue the other party for restitution. A cancellation voids the contract. Restitution is intended to restore the party to the position that he or she was in prior to entering into the agreement. A contract may not be canceled if one party has already performed its side of the bargain.
Contact Experienced New Jersey Contract Lawyers
If you have questions about a breach of contract case, contact Kim & Feliz, LLC today. Our experienced attorneys can help you fight for justice. Contact us online or call (201) 585-2250 to schedule an appointment.