A breach of an agreement is also called a breach of contract. A contract is an agreement between two or more parties that creates an obligation to do or not do something. A breach of contract is the failure to fulfill the duties under the terms of the contract.

If you are terminating your business, you may find yourself involved in a breach of contract lawsuit if you did not fulfill your duties under the terms of any business related contract. Here are a few of the common types of contract that you may have entered into:

• Customer Contract
• Employment Agreement
• Business Associate Agreement
• Partnership Agreement
• Web Hosting Agreement
• Lease Agreement
• Franchise Agreement

A breach of contract usually occurs when a party to the contract does one of the following:

• Fails to perform as promised
• Makes it impossible for the other party to perform
• Makes it known there is an intention not to perform

Statute of Frauds

It is always best, although not always required, to have a contract in writing. Nearly all states have a law called the Statute of Frauds that lists the types of contracts that must be in writing to be enforceable. The purpose of these laws is to prevent fraudulent claims from arising. Although Statute of Frauds laws will vary from state to state, the following types of contracts generally must be in writing to be enforceable:

• Sales of real property
• Promises to pay someone else's debt
• A contract that takes longer than one year to complete
• Property leases for more than one year
• Contracts for more than a certain amount of money, the amount of which is set by the state
• A contract that will go beyond the lifetime of the one performing the contract
• The transfer of property upon the death of the party performing the contract

Statute of Limitations

Statutes of limitations are laws that set the deadline or maximum period of time within which a lawsuit or claim may be filed. The deadlines vary depending on the circumstances of the case, and the type of case or claim. The periods of time also vary from state to state and vary depending on whether filed in federal or state court. If a lawsuit or claim is not filed before the deadline, the right to sue or file a lawsuit or claim is barred.

Small Claims Court

Small claims courts exist for the purpose of resolving simple disputes quickly and economically and are considered courts of limited jurisdiction, allowing claims for dollar amounts ranging from $1,500 to $15,000. In small claims court, the judgment is usually rendered immediately after the hearing. Appeal rights for both plaintiffs and defendants are limited. Parties are generally not represented by attorneys in small claims court actions. The procedures in small claims court are much more informal than in other types of litigation so little preparation is needed or required.

Civil Trial Court

If the dollar amount of the claim exceeds the limited amount of a small claims court, the lawsuit can be filed in a trial court. The procedures are formal and you will have to learn and follow all of the rules and procedures.

Remedies for Breach of Contract

A remedy is a right given to a party by law or by contract that the party may exercise upon a default or breach by the other contracting party. Whoever wins the breach of contract lawsuit will be entitled to some kind of relief under law. The main remedies available for a breach of contract include:

• Damages, which are payment in one form or another paid by the breaching party to the non-breaching party. There are four basic types of damages: (1) compensatory damages, which serve to place the non-breaching party in the position the party would have been in if the breach had not occurred; (2) nominal damages, which constitute a token award of damages where there has been no actual money loss; (3) liquidated damages, which are a specific amount of damages agreed to at the time the contract was entered into; and (4) punitive damages, which serve to punish the breaching party.
• Specific performance, which is the compelling of the breaching party to do specifically what the party agreed to do under the contract, is awarded if it is determined that damages are inadequate as a legal remedy to the non-breaching party.
• Cancellation and restitution may be awarded if the non-breaching party has performed under the contract and given the breaching party any benefit under the contract. Restitution will put the non-breaching party back in the position he or she was in prior to the breach, and cancellation of the contract will void the contract and relieve all parties of any further obligations under the contract.

Related Resources on Lawyers.com^sm

- Need a form? Access hundreds of Consumer & Business Legal Forms that cover a range of legal needs such as Notice of Contract Default
- Read Assigning a Contract or access more Contracts articles and information
- Read more Small Business Law articles and information
- Selecting a Good Lawyer
- Find a Contracts Lawyer in your area
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