Breach Of Contract Actions In Colorado

1.     What Is A Breach Of Contract Action?

A breach of contract action is an action based in contract law. In short, a contract is a set of promises made between two or more individuals that set expectations between the parties. A breach occurs when one party chooses not to perform their promise. But not every breach is actionable.

2.     Requirements For A Breach Of Contract Action?

In the seminal case, W. Distrib. Co. v. Diodosio, the court laid out the requirements for a breach of contract action. 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. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1053 (Colo. 1992).

These four elements make up the basis for a breach of contract action. The petitioner, often known as a Plaintiff, must prove each element by a certain standard of proof. In most cases, the standard of proof is by a preponderance of the evidence meaning more likely than not.

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.

3.     Existence Of A Contract.

A contract is formed when an offer is made and accepted and the agreement is supported by consideration. Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008). A valid contract is created when there is a "meeting of the minds" between the parties as to all essential terms of the contract. Jorgensen v. Colo. Rural Props., LLC, 226 P.3d 1255, 1260 (Colo. App. 2010). 

Contracts can be created with little to no effort. It is important to take the time to sort through each fact pattern to determine if a contract could have been formed if even by accident.

A common misconception is that a contract needs to be in writing. While this is true sometimes, it is not true all the time. Contracts can be either verbal or written depending on the situation.

To find a contract, I typically start by asking a potential client, did you develop an expectation with regards to the problem? Next, we look at why that expectation exists. A contract can be formed by words, conduct, and action. We are trying to find a fixed point in time where all three required elements were present and manifested themselves in a way that a contract was formed. Therefore, it is important to explore the context from which the expectation was birthed. While not every exploration results in a contract, this process can often uncover other equitable actions such as unjust enrichment or promissory estoppel problems which can be just as powerful as a breach of contract action.

4.     Performance Or Justification For Non-Performance

The "performance" element in a breach of contract action means "substantial" performance. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1053 (Colo. 1992). Substantial performance occurs when, although the conditions of the contract have been deviated from in trifling particulars not materially detracting from the benefit the other party would derive from a literal performance, the defendant has received substantially the benefit he expected, and is, therefore, bound to pay. W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1053 (Colo. 1992).

Next, the petitioner must prove they performed the contract or had a justification for not performing the contract. In short, the petitioner must have done their fair share in order to ask the court to enforce the contract. This requires a detailed inquiry into how the petitioner meet their obligations.

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.

5.     Failure To Perform The Contract

Next, the petitioner must prove the other party failed to perform the contract. This requires a two-part question. 1) Was there a duty under the contract?; and 2) if so, did the Defendant meet that duty?

There is case law indicating the substantial performance factor does not apply to the breach portion of a breach of contract action. See Horton v. Bischof & Coffman Constr., LLC, 217 P.3d 1262 (Colo. App. 2009). The exact line is up for debate. But that being said, as a safety measure, I recommend taking the time to establish that there was a clear and substantial breach. Taking those extra steps can help to solidify your case.

6.     Damages

Lastly, the petitioner must prove damages. Damages are determined on a case-by-case basis. If damages are uncertain, the court has the option to award what are known as nominal damages.  Because damages differ by case, it is important to gain a realistic understanding of what is possible and/or likely early on in the process.

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.

7.     Attorney Fees

Currently, Colorado adheres to what is known as the American Rule for Attorney Fees. Attorney Fee are by default non-recoverable in a civil action unless there is some other factor such as a statue that allows them. For contract cases, this factor may be an attorney fee provision. These clauses can have a massive impact on the feasibility for bringing litigation. It is important to look for these clauses prior to bringing any action because special pleading rules apply.

8.     What Do I Need To Talk To An Attorney

Schedule a free case evaluation today by using one of the many links on this site. Prior to the meeting, the potential client should have a copy of the contract in hand if it is written and a clear understanding of the surrounding facts.

9.     Services Offered

Michael Larranaga offers the following contract services.

• Litigation

• Contract Drafting

• Contract Review

• Contract Negotiation

• Other

Thank you for taking the time to read this article. If you are interested, I encourage you to fill out the free case evaluation form.

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.