Orange County's Premier 
Breach of Contract Attorneys

(714) 954-0700

Have you suffered a breach of contract, or are you being falsely accused of breaching a contract?  Our attorneys bring the knowledge and methods necessary to quickly resolve breach of contract matters and any other business litigation disputes throughout Orange County and all of Southern California.  We are results-oriented, with a constant eye on the bottom line.  Our cutting-edge technology and techniques allow us to bring you the highest quality legal services, usually at a fraction of the cost charged by other firms.  Call now for a no-cost consultation at (714) 954-0700, or go to our contact form to send us a question by email.

What is a Breach of Contract?

A breach of contract occurs when a party to a contract fails to perform the terms of that contract. Most contract breaches are easily identified, but many may come down to an interpretation of the wording of the contract. A contract requires a "meeting of the minds", so a battle can arise if the parties thought the contract had different meanings. 

Who Breached the Contract First?

A point that is lost on many attorneys is that the failure of one party to perform usually relieves the other party of any obligation under the contract. Sometimes this is quite obvious. If you promise to buy a used car for $10,000, and the seller never delivers the car, then clearly you are excused from still having to pay the $10,000. But sometimes the issue of a breach excusing performance is not so obvious.

We recently represented a party who had entered into a settlement agreement. Pursuant to the settlement agreement, the other side had promised to pay money to our client, and our client promised to never disclose the terms of the settlement. When the party breached the contract (the settlement agreement) by failing to pay the promised amount, we sued, attaching the settlement agreement to the complaint. The other side then counter-sued, claiming that we had disclosed the terms of the settlement in violation of the agreement. But by failing to pay the amount owed under the contract, the other side had already breached the agreement, and our client was therefore relieved of his duty to keep the settlement confidential. On our motion, the court threw out the cross-complaint and ordered the defendant to pay all of our attorney fees. 

It is important to consider the issue of who breached first, both when performing under the contract and in determining if you have a solid case. Take the case of a construction agreement. You hired a contractor for a home improvement project, and you notice he is not doing some of the things you requested. You repeatedly tell him about the problems and eventually grow so frustrated that you order him off the job, and he sues for breach of contract. The court could find that you breached first by removing him from the job when he could have corrected the problems. To preserve your action and to make certain you do not end up in this scenario, it is crucial that you continue to perform under the agreement. Give us a call to find out the best way to protect yourself when the other party is breaching.

Is the breach of contract "material"?

It is also important to know that while you may have a clear breach of contract, sometimes it does not make sense to pursue a breach of contract action.  You need to determine whether the breach was material and caused damages. Say, for example, you hire a contractor to paint the outside of your office building.  The contract provides that the job will be completed by June 1, but does not provide for any penalties for breaching the contract by failing to finish the project by that date (usually called "liquidated damages").  June 1 comes and goes and the job is not completed.  You call the painting company and complain, send a demand letter, and finally the painters show up and the job is finished on June 9.  Clearly there has been a breach of contract, but was it material, and did it cause damages?

In terms of damages, did the eight day delay keep you from renting office space?  Did it prevent you from using any portion of the building?  Did you lose any tenants as a result of the breach of contract?  You may have been frustrated by the delay, but did it really cost you any money?  You see, the fact that there has been a breach of contract does not always mean that you can or should sue. 

The Restatement (Second) of Contracts lists the following criteria to determine whether a specific failure constitutes a breach of contract:

In determining whether a failure to render or to offer performance is material, the following circumstances are significant: (a) the extent to which the injured party will be deprived of the benefit which he reasonably expected; (b) the extent to which the injured party can be adequately compensated for the part of that benefit of which he will be deprived; (c) the extent to which the party failing to perform or to offer to perform will suffer forfeiture; (d) the likelihood that the party failing to perform or to offer to perform will cure his failure, taking account of all the circumstances including any reasonable assurances; (e) the extent to which the behavior of the party failing to perform or to offer to perform comports with standards of good faith and fair dealing.

American Law Institute, Restatement (Second) of Contracts § 241 (1981)

Are oral agreements enforceable?

Contrary to popular belief, oral contracts are every bit as enforceable as written contracts.  In fact, in jury trials, the jurors are specifically instructed that oral contracts are no different than written contracts.  They are, however, harder to prove since you are lacking that important evidence of a writing, but often the circumstances are enough to show that the parties had an agreement.  We recently won a judgment on behalf of our client exceeding a million dollars, all based on a handshake deal.  In that case, the defendants hoped to avoid repaying the loans our client had made to them, by claiming that the money was in fact an investment in a failed business, and not a loan.  We were able to prove by all the surrounding circumstances that the money had been a loan to the individuals, and not an investment in the business.

If the breach of contract was flagrant, can I sue for fraud?

Many have the understanding that a breach of contract action can somehow morph into a fraud action if the breach was intentional or caused great harm.  For example, we often get calls from people who have loaned money to someone, who stops making payments after a few months.  The person is very upset because they were depending on the payments, and now because of the loan they are missing their own payments and suffering late fees and damaged credit.  They proclaim that they want to sue for fraud and punitive damages.  

Breach of contract and fraud are completely different causes of action and normally occur at different times.  To prevail on a breach of contract cause of action, you basically need only prove that you performed under the agreement, but the other side failed to do so.  For fraud, you must show that the defendant (1) made a misrepresentation, (2) knowing it was false, (3) intending that you rely on the misrepresentation, and that (4) you justifiably relied on that misrepresentation, (5) to your detriment.  Thus, if the defendant took the loan fully intending to pay it back, that is not fraud.  Stated another way, fraud must take place before you loan the money, breach of contract occurs when the money is not paid back.  That is not to say both cannot occur.  If the defendant took the money knowing he could not pay it back, that is fraud.  And when he later fails to repay the money, that is still breach of contract. 

Call today for your no-cost telephone consultation.

If you are experiencing a breach of contract issue in Orange County or any of the surrounding Counties, then call the Law Office of Morris & Stone, at (714) 954-0700.

Breach of Contract Attorneys Orange County

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