How is a Contract Enforced?
An enforceable contract is a business agreement that can be enforced by the law. The law does not enforce every business agreement or contract. You need to take the necessary steps to understand whether or not your contract can be enforced.
How is a Contract Enforced?
A rule of thumb is that the more detailed a contract, the easier it is to enforce. When a contract is too thin or not detailed, this causes problems for both parties in the event of a breach.
Good contracts specify what type of response or enforcement will be available if a breach occurs.
Validity: What Makes a Contract Valid?
A contract is deemed valid when it makes an offer to one party and the other party accepts it. The contract offers something of value in exchange for a promise or payment. This makes a contract valid.
Courts analyze each contract to determine if you have a case based on the validity of your contract. Therefore, a contract that does not meet the qualifications of validity will receive no enforcement.
6 Basic Requirements of a Valid Contract
- Each party has something of value to provide to the other.
- Offer is made and accepted.
- Both parties are capable and able to make a contract.
- The expectation for the contract is that it will be legally binding.
- Contract is valid whether written or verbal.
- No law has been violated with the contract.
Although you may be able to recognize whether or not your contract is valid under these six basic requirements. It’s always a good idea to receive the perspective of a legal professional. Before seeking legal action such as a lawsuit, you want to be sure that you have a good enough case to win.
Breach: Anticipatory, Actual, Minor, or Material?
Every breach falls under one or two of the categories. Most of the time, a breach is either anticipatory or actual. An anticipatory contract breach occurs when one party decides not to fulfill the contract before the due date occurs while an actual contract breach happens on the due date or refuses to fulfill completely. These breaches are based on the time of breach.
A minor breach and a material breach are treated differently in contracts. In most cases, contracts outline the response that should occur if either party breaches the contract.
Basically, a minor breach is considered to be when a party fails to complete a nonessential portion of the contract. Depending on the contract, the breaching party may have a certain time limit to correct the error. Lawyers use “partial breach” or “immaterial breach” to refer to a minor breach as well.
Meanwhile, a material breach occurs when the breaching party doesn’t complete an essential part of the contract. This breaks the contract. For a material breach, the non-breaching party may be released from the contract completely and file a lawsuit against the breaching party.
6 Guidelines to Determine the Breach of Contract
- Measurement of what breaching party has completed of contract
- The intent of the breach: intentional, negligent, or an accident
- Belief that breaching party will complete the contract
- Measurement of non-breaching party’s benefits before breach
- Potential compensation for non-breaching party’s losses
- Difficulty placed on breaching party if the court determines a material breach
Legal professionals determine the severity of the breach. You may suspect that something illegal has occurred, but always check your suspicions against the experience of a lawyer before taking steps to file a lawsuit.
Enforcement: To Enforce or Not to Enforce
Once the court confirms that a contract does exist, the court then begins to determine whether or not it should be enforced. In some cases, the court might decide not to enforce the contract, meaning that they have found defenses to the contract. These defenses are the reasons not to enforce.
Sometimes, a contract might be so extreme in unfairness that a court might decide that it should be voided. Every situation is different and requires legal understanding.
Start by Reaching Out to the Other Party
If you believe that your contract is being breached, speak with the other party. They may have a plan to follow through on their promised side of the agreement. Sometimes, the party will be motivated to fulfill their end of the contract.
Check Your Contract Terms
However, if you don’t hear from them, you can check your contract for whether any parameters are set on how you pursue your rights in light of a breach. Some contracts might require a mediation or arbitration. From here you may want to try to informally settle the matter before pursuing legal action to demand damages.
A lawsuit can settle the issue if negotiations fail.
When someone experiences a breach of contract, they may win certain damages from the court to make up for their losses due to the breach. These damages are usually monetary. In breach of contract, two types of damages exist: expectation and consequential.
Money is awarded to cover the expenses of what you thought you were going to receive from the contract. This can be based on the contract or the market value.
Money that’s paid to cover indirect damages occurred. This can be much more difficult to determine. The damages must stem right from the breach and be considered to have been foreseeable.