Elements of a Breach of Contract Claim In Colorado
To maintain a claim for breach of contract the petitioner often known as the Plaintiff must prove 4 elements by a preponderance of the evidence:
The existence of a contract;
The petitioner performed the contract or had a justification for not performing the contract;
The other party failed to perform the contract; and
Damages
See W. Distrib. Co. v. Diodosio, 841 P.2d 1053, 1053 (Colo. 1992).
Standard of Proof
To prevail on a breach of contract claim, the petitioner often known as the Plaintiff must prove each and every element of their claim by the designated standard of proof. For breach of contract, the standard of proof is typically by a preponderance of the evidence.
If a petitioner fails to prove anyone element, the entire claim fails.
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.
Element 1: The Existence Of A Contract
Three elements are required to prove a contract exists:
An offer was made;
The offer was accepted; and
The agreement was supported by consideration.
See Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008).
An offer must contain clear and definite terms. The acceptance must accept these terms. In other words, 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).
In short, in order to have a valid contract, party 1 must convey a clear and definite offer to party 2. Party 2 must receive and understand the offer at which point they must manifest acceptance. Where the parties do not agree to the same material terms, there is no contract. Hence, there must be a meeting of the minds as to the essential terms of the contract. The rules are slightly different for sales contracts involving goods, but the primary point is that the parties need to understand what they are agreeing to do.
Consideration simply means that each party is receiving or foregoing something. I.E. is there a legal detriment? The consideration rules are fairly complex, but the concept is relatively simple. You have to pay to play. Those that play for free cannot expect the court to enforce a contract.
To prove a contract exists, we look at all the surrounding circumstances, the actions of the parties, and so on. This can be done through witness testimony, documents, and other. Ideally, the contract will be in a signed writing. Verbal contracts are often the hardest to prove because memories change over time. Therefore, it is essential to maintain good documentation and take the time to explore the facts.
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.
Element 2: Performance of the Contract or Justification For Non-Performance
Element 2 for breach of contract in Colorado requires the petitioner to prove that they performed the contract or had a justification for not performing the contract. The performance element in this context means substantial performance. See 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).
In other words, you must prove you held up your end of the bargain.
In the alternative, you must prove that you had a justification for not performing. This often occurs when a party states that they will no longer perform their obligations under the contract. Therefore, their non-performance relieves the petitioner from future obligations to perform their end. For example, let’s say a contractor is obligated to build a house for the buyer. The buyer is expected to make payments every quarter. Half-way through the build the buyer emails the builder and states they will no longer make any payments under the contract. This puts the contractor in a hard spot since they are obligated to build the house under the contract. But wait, the buyer’s non-payment may excuse the contractor from the obligation to finish the house. The point is there are situations where performance may be excused. In those situations, the petitioner may still maintain a breach of contract suit even if they have not performed every obligation under the contract.
Element 3: The other party failed to perform the contract
Next, the petitioner must prove 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.
Element 4: Damages
Lastly, the petitioner must prove damages. Damages are determined on a case-by-case basis.
General Rule of Damages
In general, all contract damages, whether general or special, economic or non-economic, are recoverable only if the damages were the foreseeable result of a breach at the time the contract was made. Giampapa v. Am. Family Mut. Ins. Co., 64 P.3d 230, 240 (Colo. 2003). In other words, we are looking for damages that make sense in the context. If a landlord breaches a residential lease agreement then it should be expected that the tenant will have to expend some funds to find another place to live.
Damages are not recoverable for losses beyond an amount that can be established with reasonable certainty. Acoustic Mktg. Research v. Technics, LLC, 198 P.3d 96, 98 (Colo. 2008). In other words, the petitioner must be able to explain their damages. A receipt is not required in every circumstance, but you need more than a mere guess in a breach of contract context.
Damage Type 1
In a breach of contract action, the measure of damages is the amount it takes to place the plaintiff in the position it would have occupied had the breach not occurred. Taylor v. Colo. State Bank, 165 Colo. 576, 580, 440 P.2d 772, 774 (1968).
In this instance, the petitioner would ask the court to make them whole. In a failure to disclose context, it may mean the difference in the property value as represented versus as-is. How this concept is enforced is highly dependent on case law.
Damage Type 2
Nominal damages are recoverable for a breach of contract even if no actual damages resulted or if the amount of actual damages has not been proved. City of Westminster v. Centric-Jones Constructors, 100 P.3d 472, 481 (Colo. App. 2003).
Nominal damages are often more symbolic in nature. They involve the award of $1 to the prevailing party. While not appropriate to seek in every circumstance, these awards are useful when seeking to establish that a breach is occurring and recovering the associated costs of litigation.
Damage Type 3
In some circumstances, it may be appropriate to ask the court for specific performance. IE. You are asking the court to force the other party to perform the contract. While general disfavored this remedy is available in certain situations. You often see this in the real estate context.
Damage Types ….
As stated above, damages vary on a case-by-case basis. There are hundreds of cases on damages. It is important that you take the time to understand what line of cases apply to your circumstance before deciding what types of damages to seek.
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.
Defenses
Contracts are based in the law of equity meaning fairness. As such, they have numerous defenses that may not be available in other civil actions. Here are a few potential defenses. Please note this is not an exhaustive list.
Civil Procedure Warning
It is important that Defendants hire an attorney that understands the Colorado Civil Rules Of Procedure. A large portion of these defenses need to be both raised and may need to be specially plead. Failure to do so may waive the defense.
Element Based Defense
The best defense to a breach of contract claim is to not breach the contract. It is the petitioner’s responsibility to prove each element by a preponderance of the evidence. If a petitioner fails to prove anyone element, the entire claim for breach of contract will fail. Therefore, a party should start by looking at each breach of contract element, developing a detailed statement of facts, and checking where the claim may fail.
Formation Defenses
A big line of defenses deals with the contract’s formation. These may include misunderstanding, mistake, fraud in the inducement, duress, coercion, or other. In short, we are looking at reasons why the contract is either invalid or does not exist.
These types of defenses intertwine with Element 1, the existence of a contract. The defendant must examine the circumstances surrounding the alleged contract.
Statute of Frauds Defense
Contracts do not always need to be in writing. As a matter of fact, the default rule is that a contract can be either written or oral. The statute of frauds concept was established to reduce the number of fraudulent contracts around certain types of transactions.
Each state has their own statute of frauds statue. Where the statute of fraud applies, it requires a certain type of contract to be in writing and signed by the party to be charged. For example, contracts to buy and sale land must be in a signed writing.
It is important to know prior to bringing a breach of contract claim what type of contract is at play and if the statute of frauds could apply.
Statute of Limitations Defense
Like the Statue of Frauds, the statute of limitations varies by state. Here in Colorado we have a statue.
In short, the statute of limitations stands for the principle that claims must be brought within a certain period of time or else they are time-barred. Different types of claims have different deadlines. While there are exceptions to the statute of limitations, typically once a claim misses the required deadline it becomes an uphill battle to maintain it.
Unclean Hands Defense
In Colorado, the clean hands maxim dictates that one who has engaged in improper conduct regarding the subject matter of the cause of action may, as a result, lose entitlement to an equitable remedy. Salzman v. Bachrach, 996 P.2d 1263, 1269 (Colo. 2000).
This is an equity defense that is unique to contract claims. In short, to maintain a contract claim, you must come before the court with clean hands. In those circumstances where the petitioners’ hands are not clean, the court may take the initiative and ban the claim. There are a variety of circumstances where this doctrine may apply. Typically, we are looking at fairness.
Impossibility/ Impracticability Defenses
In Colorado, you may have a defense against breach of contract where the performance of the contract is impracticable.
We are looking for an unanticipated circumstance that makes performance vitally different from what should be reasonable by contemplated by both parties at the time the contract was entered into. Colorado requires that performance be impracticable versus impossible.
Waiver Defense
A waiver may occur where one party intentionally relinquishes a known right or privilege.
In short, a party may waive the ability to pursue a breach of contract claim for a specific breach. A waiver does not always need to be in writing or explicit. It may be implied. Therefore, it is essential to have a clear grasp on the sequence of events.
Contract Defense
Often the best defenses can be found within the contract itself. Contracts are legal documents. As such, they can have different interpretations. It is important to analyze both the contract and the context surrounding the contract to ensure it makes sense. It is not uncommon for two attorneys to read a contract differently.
Ultimately, the final decision on the meaning of the contract is left up to the courts. Therefore, you cannot overlook this item.
Other Defenses
The list of defenses is too long to list in any single posting. The important thing to remember is that each defense depends on the facts of a particular case. No one defense will be applicable in every situation. You should contact an attorney to determine the best defense that may be applicable in your particular circumstance.
Services Offered By Larranaga Law
Michael Larranaga offers the following contract services.
Litigation
Contract Drafting
Contract Review
Contract Negotiation
Other
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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.