Contract litigation may be necessary when someone breaches a contract or questions its terms.
Business contracts, in particular, are often intricate, and litigation entails demonstrating term meanings and intent, assessing legality and enforceability, identifying breaches, and determining owed damages.
Litigation can stem from various contract disputes in business, organizations, or government.
Even a single open-to-interpretation element, legal unenforceability, or failure to address unforeseen circumstances can trigger litigation.
A robust contract requires exceptional experience to interpret intent and argue persuasively in court.
The Necessary Elements of a Contract
In contract litigation cases, the plaintiff must demonstrate that the contract includes all necessary components to establish its binding nature, which include:
The Offer
Simply stated, the offer amounts to one party stating, “I’ll give you this for that.” You offer one thing, whether it is a specific payment, product, service, etc., in exchange for what you want from the other party.
If no formal agreement has been reached, making offers non-legally binding.
The Acceptance
If the other party agrees to your offer as is, it becomes a contract.
Usually, they’ll want to improve terms and make a counteroffer.
Parties can negotiate back and forth until they reach mutually agreeable terms. If they don’t reach an agreement, there’s no acceptance, and consequently, no contract is formed.
But if the acceptance matches the offer precisely, it forms the basis of a contract.
Consideration
In a legally binding contract, both parties must provide consideration, which represents the benefit each receives.
It’s typically a promise to do something not legally obligated or an agreement not to exercise a legal right, like refraining from a lawsuit.
Contracts without consideration may be deemed unenforceable in some courts.
Mutuality of Obligation
Both parties must agree to be bound by the terms of the agreement.
Legal Capacity
All parties must possess legal capacity to enter a contract.
For instance, someone representing a business must have the authority to bind it.
Typically, minors, those with mental impairments, those unable to understand the contract’s purpose, or those under duress may lack the capacity for a legally binding agreement.
Capacity may be subject to court determination, and parties lacking capacity can void the contract if deemed so.
Writing
Not all contracts need to be in writing; oral contracts are valid in many cases.
Voiding a Contract
Despite meeting legal conditions, parties may have various reasons to void contracts, whether valid or not.
These reasons can include allegations of fraud, undue influence, duress, and more.
An experienced attorney can assess the potential validity of these contract nullification claims.
Avoiding Contract Litigations
Business agreements are like marriages – parties are often optimistic during contract formation, neglecting future litigation possibilities and making contract term mistakes.
Common reasons for Breach of Contract include:
- Inaccurate Party Identification: New businesses may misidentify parties, inviting personal liability.
- Personal Guarantees: Individuals signing personal guarantees waive incorporation protections.
- Jurisdictional Clauses: Contracts may favor one party’s jurisdiction, causing inconvenience and legal counsel search.
- Arbitration Clauses: Some contracts opt for arbitration over court litigation, limiting appeal rights.
Preserving the court option can be crucial for severe contract litigation cases.