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Lawsuits & Litigation

How Do You Sue a Company for Breach of Contract?

— June 9, 2021

There are several other requirements for a valid contract, including the legality of the agreement and the freedom of the parties to negotiate or reject the other’s offer. 

Contracts are sometimes purposefully vague.  One of the primary goals of complex legal language in a contract is to discourage those who might have a case from filing a lawsuit when there is a breach of contract.

To file your suit against a company for breach of contract, you must first make sure that there was a breach of contract – that is, the other party must have violated the terms of the valid contract, and the violation must have caused negative effects for you or your business.  Then you must pick the right court in which to file your complaint.  Once you have filed your complaint, you must also serve your opponent with a copy of the complaint.  You will receive a summons from the court that will inform you of the date and time of your first hearing, and from there the suit begins.

Let’s dive into the individual pieces of the process.

Making Sure You Have a Valid Contract

In order to have breached a contract, the contract must have been valid.  The basic elements of a valid contract are the existence of consideration, an offer, and an acceptance.

The legal concept of consideration means something of value that is being exchanged as part of the contract.  There must be consideration on both sides – for instance, if you write a note saying “I owe you $100,” this is not a contract because you did not receive value in return.

An offer occurs with one party’s declaration of their desire to enter into a contract.  The offering party must indicate that they are willing to exchange something in return for something else.  If the other party agrees to the terms of the exchange, that will constitute acceptance for the purpose of the valid contract.

There are several other requirements for a valid contract, including the legality of the agreement and the freedom of the parties to negotiate or reject the other’s offer.  Further, contracts involving certain items such as real estate must be written in order to be valid.  If you aren’t sure if you have a valid contract, seek the counsel of an experienced breach of contract attorney.

Determining if a Breach of Contract Occurred

If one of the parties fails to perform according to the terms of the contract, that party is in breach of the contract.  For example, let’s say you own a bakery, and entered into a contract with a produce market to give you 20 apples by Friday in exchange for $50.  If you paid the $50, but didn’t receive the apples by Friday, the produce market has breached the contract.  The produce market is also in breach if on Friday you receive 20 oranges.

Determining Damages from a Material Breach

Oranges; image courtesy of LoggaWiggler via Pixabay,

In order for you to recover compensation in court for a breach, the breach must have been substantial enough to cause you damages.  Using the previous example, if your bakery was unable to produce apple pies for the weekend due to the produce market’s breach of contract, your damages might include the $50 that you paid for the apples plus the revenue from the pies that you might have otherwise sold without the breach.

If you are preparing a lawsuit for breach of contract, it is critical that you keep record of any damages that might have stemmed from the breach.  The amount of damages that you attempt to recover will also impact the court where you file suit.

Deciding Where to File Your Complaint

Depending on the circumstances of your case, you may have a choice of where you would like to pursue your claim.  One option that may be available to you is small claims court.  States often have a limit on damages that you can pursue in small claims court.  If you qualify for small claims court, you may prefer this path as the rules of procedure are often much less complicated and tedious.

You will also likely have a geographic choice of court.  You will need to identify the courts that have jurisdiction – that is, the courts that are legally capable of hearing the case.  If the appropriate court is not predetermined by the language of the contract, the decision should consider the residency of the various parties.  State laws differ on procedure and jurisdiction guidance.  For help on picking the best possible venue for your case, consult a seasoned attorney who can explain the benefits of the different options.

Prepare and File Your Complaint

A typical complaint will contain the following information:

  • Names and addresses of all of the parties to the contract
  • A description of the contract, or a copy of the contract if written
  • Reasoning for why the court has jurisdiction
  • Explanation of the breach and the consequences
  • Amount of damages sought and reasoning

You should have this information prepared in advance of sitting down to prepare the complaint or provide it to the attorney who is preparing the complaint for you.

Once you file your complaint, you have a limited amount of time to provide (or serve) the other party or parties with a copy of the complaint. Different jurisdictions have unique rules for how to appropriately serve the parties to a lawsuit. Whether you are filing a complaint against a business partner, service provider, or legal SEO agency, you will need an attorney who is familiar with the rules of the jurisdiction and can ensure that the service process is handled smoothly.

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