6 Basic Steps To Help Prepare You For Breach Of Contract Litigation

Breach Of Contract Elements:

In Colorado, your standard breach of contract claim has four elements. Each element must be proven by the party bringing the claim or else the entire claim fails. To prevail on a breach of contract action in Colorado the petitioner must prove:  

1.     The existence of a contract;

2.     The petitioner performed the contract or had a justification for not performing the contract;

3.     The other party failed to perform the contract; and

4.     Damages

See W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1053 (Colo. 1992).

I discuss the elements in various other articles on my site. I encourage you to explore my site and read Breach Of Contract Actions In Colorado and Elements of a Breach of Contract Claim In Colorado. While none of these articles are legal advice, they are intended to help readers understand and identify circumstances where it may be appropriate to call an attorney.

THIS ARTICLE DOES NOT FOCUS ON THE ELEMENTS OF BREACH OF CONTRACT. RATHER IT FOCUSES ON IDENTIFYING FACTS AND INFORMATION THAT MAY BE USEFUL WHEN TALKING WITH AN ATTORNEY.

PLEASE DO NOT RELY ON ANY PORTION OF THIS ARTICLE AS VALID LAW. THE PURPOSE OF THIS ARTICLE IS TO GIVE THE READERS A BRIEF OVERVIEW OF BREACH OF CONTRACT ACTIONS. THIS IS NOT LEGAL ADVICE. LAWS AND RULES CHANGE ON A REGULAR BASIS. CONTACT AN ATTORNEY FOR THE MOST UP TO DATE LAWS.

Basic Step 1 To Help Prepare You For Breach Of Contract Litigation:

Find The Contract

One of the basic elements of any breach of contract lawsuit is the contract itself. People often misunderstand what constitutes a contract. They imagine a long formal document signed in a room full of lawyers and notaries. While this can be the case, it can also be a verbal exchange, a handshake agreement, a series of emails, and other.

While it gets more complex, the three general elements of a contract are an offer, acceptance, and consideration.

Offer: In general, an offer must contain clear and definite terms. In other words, you are looking for a situation where a party’s conduct, speech, and/or writings form a clear set of ideas that can be accepted by another person.

Acceptance: Acceptance can take a variety of forms but is often done via signing a document or shaking hands. I still run into many individuals that refuse to reduce their contracts to writing. IE, A man’s handshake is all I need. Allot of times that is good enough.

Consideration: This is the hardest concept for people to understand. That is because it is a legal term that has a lot of case history. But for our purposes it simply means both parties are giving something up. It can be as simple as cash, the promise to do something, or the promise not to do something. But in short, each person must give something.

Example Of Potential Contract

1.     Example 1: A local Gardner walks from door to door offering to mow each person’s lawn. He walks the lawn and then states a price. The homeowner agrees to the price and tells the Gardner that they will pay him when he is done. The Gardner does the work. In this situation, we have a Gardner approaching individuals offering to mow lawns. At this point, it is arguable that no contract has been formed because no terms have been exchanged and no action has been taken by either party asides from the initial introduction. This is sometimes called an offer to make an offer. Following the initial interaction, the Gardner walks the lawn and provides the homeowner with a price. At this point, it can be argued the Gardner has made an offer. In exchange for mowing your lawn, you will pay me x. But the homeowner accepts with the small modification that he will pay the Gardner after the lawn is complete. At this point it can be argued that the homeowner rejected the Gardner’s offer and made a counter-offer. This is often called the mirror image rule. It is a legal concept that to accept an offer you must accept the terms exactly as offered. Any deviation equals a counter-offer. But this is not true in every situation and/or jurisdiction. Finally, the Gardner completes the work. At the point, it can be argued that the Gardner accepted the modified terms by performing the work. In other words, regardless of if the home owner pays, it can be argued that both the homeowner and Gardner entered into a contract. In terms of consideration, the money would be the consideration for the homeowner and the actual labor would be the consideration for the Gardner.

2.     Example 2: Here is a simpler example. Party A presents Party B with a legal document. It has all the bells and whistles and at the very top it says “Contract.” Party A has already signed. Party B reads the contract, it makes sense, and they sign it. By presenting the signed document to Party B, it can be argued that Party A made an offer. By signing the document after reading, it can be argued that Party B accepted the offer. Now the only remaining question is if there is consideration. This is a very common contract scenario. But even this simple example can be riddled with legal questions. Is Party B in their right mind? Did they understand what they were signing? Is their fraud? It is always best to contact an attorney.

The Basics Of The Contract In The Breach Of Contract Lawsuit: At the earliest stage of any breach of contract lawsuit is the determination of whether or not a contract does or does not exists and what that contract entails. It often involves listening to the potential client’s entire story, asking follow up questions, and writing a statement of facts. The attorney then takes these facts and looks for the warning signs of a contract. This can be a promise, performance of an act, surrendering of money, or a wide variety of other items.

The phrase it was not in writing, so it did not happen does not kill your right to recovery. Call an attorney. Even if you think you may not have created a contract you need to talk to an attorney. There are multiple other lawsuits that can stem off a failed breach of contract lawsuit. The writing helps but it is not conclusive in every case.   

PLEASE DO NOT RELY ON ANY PORTION OF THIS ARTICLE AS VALID LAW. THE PURPOSE OF THIS ARTICLE IS TO GIVE THE READERS A BRIEF OVERVIEW OF BREACH OF CONTRACT ACTIONS. THIS IS NOT LEGAL ADVICE. LAWS AND RULES CHANGE ON A REGULAR BASIS. CONTACT AN ATTORNEY FOR THE MOST UP TO DATE LAWS.

Basic Step 2 To Help Prepare You For Breach Of Contract Litigation:

Figure Out Who Breached The Contract

This is often the most complex question in any breach of contract litigation/ action.

Looking back at the elements of breach of contract, remember that the petitioner must prove among other elements that:  

1.     The petitioner performed the contract or had a justification for not performing the contract;

2.     The other party failed to perform the contract;

Here are 3 questions that a party should ask themselves about their conduct:

1.     To the best of my knowledge, did I violate any portion of the contract? If so, how? If you’re not sure, why not?

2.     To the best of my knowledge, did the other party accuse me of doing anything wrong? If so, what and what provision is the accusation based on?

3.     To the best of my knowledge, could I have done anything better?

These types of questions help to prep a potential client to get ready to talk to an attorney. They force the client to take a introspective look at if they did anything that could have led to the other party causing the breach. These facts are going to play directly into if the petitioner substantially performed their portion of the contract or had a justification for not doing so. In addition, they may help the attorney to uncover legal pitfalls, grey areas, and other items that need to be addressed. To know thy self is the best defense from the conduct of thy self.

Here are 3 questions that a party should ask themselves about the conduct of the other party:

1.     To the best of my knowledge, did the other party violate any portion of the contract? If so, how? If you’re not sure, why not?

2.     To the best of my knowledge, did I accuse the other party of doing anything wrong? If so, what and what provision is the accusation based on?

3.     To the best of my knowledge, could they have done anything better?

These types of questions are similar to the questions that you should ask yourself. But the purpose of these questions is to help identify potential breaches to help aid in your discussions with legal counsel. These facts are going to play directly into if the petitioner had a justification for not performing the contract or if the other party failed to perform the contract.

PLEASE DO NOT RELY ON ANY PORTION OF THIS ARTICLE AS VALID LAW. THE PURPOSE OF THIS ARTICLE IS TO GIVE THE READERS A BRIEF OVERVIEW OF BREACH OF CONTRACT ACTIONS. THIS IS NOT LEGAL ADVICE. LAWS AND RULES CHANGE ON A REGULAR BASIS. CONTACT AN ATTORNEY FOR THE MOST UP TO DATE LAWS.

Basic Step 3 To Help Prepare You For Breach Of Contract Litigation:

Figure Out If You May Have Damages

Determining what damages may or may not be available is not an easy task. The harmed party needs to take a moment to ask themselves the following questions.

1.     How have I been harmed? If so, how?

2.     Would this harm have happened regardless of if the other party performed their duties?

3.     Is the harm directly related to the other party’s conduct?

These types of questions help to prep a potential client to get ready to talk to an attorney regarding damages. Think broad and work backwards. You need to be able to establish a link between the damages and the breach. Otherwise, they may be difficult if not impossible to recover. In other words, potential clients should really think about what the potential breach has caused.

Start by looking at the obvious. What obvious problem did the breach cause? Did that obvious problem cause other problems? The potential client should work out as far as they can and then look for less-obvious problems. At the very end, they should try to link the damage to the breach. This giant mess of data may help potential clients to see what damages may or may not be feasible.

Specific Performance: Certain types of contracts permit the harmed party to seek specific performance meaning a court order forcing the other party to comply with the contract. Other types of contracts do not. The uniqueness of the item is often a consideration. For example, land is often considered unique. That is why a large portion of the sales contracts that one may see in Colorado may entitle the buyer to seek specific performance.

Examples of Damages:

1.     Damage Example 1: John entered into a signed written contract with Sue. Sue promised to sell John a unique piece of art for $1,000 to be paid the following day. Overnight, the price skyrockets to $5,000. John meets sue the next day with the $1,000 in hand. Sue refuses to sell John the painting for less than $5,000. In short, it can be argued that Sue breached the contract by refusing to sell John the painting at the agreed upon price. Due to Sue’s refusal John has lost out on the increase in value of the painting. Therefore, the loss in value could be something that John discusses with an attorney. In the alternative, maybe John still wants the painting. This may be one of those rare circumstances where the court could force Sue to sell John the painting at the agreed upon price. Why? Because the painting was unique.

Basic Step 4 To Help Prepare You For Breach Of Contract Litigation:

Figure Out Your Goals

Among the most important questions that I ask here at Larranaga Law is what do you want to get from this? What is your goal?

Potential Clients should take time to figure this out because it can influence every decision that you make going forward. It may help the potential client in deciding if litigation is the right course; if they would prefer to angle for settlement; if they prefer to seek specific performance; or other. In addition, it can affect how the attorney chooses to approach the situation.

PLEASE DO NOT RELY ON ANY PORTION OF THIS ARTICLE AS VALID LAW. THE PURPOSE OF THIS ARTICLE IS TO GIVE THE READERS A BRIEF OVERVIEW OF BREACH OF CONTRACT ACTIONS. THIS IS NOT LEGAL ADVICE. LAWS AND RULES CHANGE ON A REGULAR BASIS. CONTACT AN ATTORNEY FOR THE MOST UP TO DATE LAWS.

Basic Step 5 To Help Prepare You For Breach Of Contract Litigation:

Figure Out Your Finances 

It sounds shallow but breach of contract litigation costs money.

Attorney fees and costs are recoverable in some but not all situations. This often plays a major role in if litigation is even feasible.

Potential Clients may wish to approach breach of contract litigation with the assumption that they may not be able to recover costs. This negative assumption can help the potential client to really think about what type of arrangement they need, is the case worth pursuing, how much could they afford to spend, and how much they would need to get back. These are all important considerations.

Basic Step 6 To Help Prepare You For Breach Of Contract Litigation:

Call An Attorney

Litigation is complex. While these articles are fun to write, it is not practical to describe all the steps necessary to prepare for breach of contract litigation. Every situation is different.

Michael Larranaga is licensed to practice law in the state of Colorado. I am a solo practice but I strive hard to ensure that I am honest and upfront with my clients. I would love to discuss your legal needs.

Click here to set up a free 30-minute case evaluation.

PLEASE DO NOT RELY ON ANY PORTION OF THIS ARTICLE AS VALID LAW. THE PURPOSE OF THIS ARTICLE IS TO GIVE THE READERS A BRIEF OVERVIEW OF BREACH OF CONTRACT ACTIONS. THIS IS NOT LEGAL ADVICE. LAWS AND RULES CHANGE ON A REGULAR BASIS. CONTACT AN ATTORNEY FOR THE MOST UP TO DATE LAWS.