How Much Can You Sue for Breach of Contract?
That's just one of several questions you must ask yourself before you begin a lawsuit against other party in a contract, whether it's a large or small amount.3 min read
Updated June 19, 2020:
How much can you sue for breach of contract? That's just one of several questions you must ask yourself before you begin a lawsuit against the other party in a contract, whether it's a large or small amount.
Even before you consult with a lawyer, you should consider the following:
- Do you have a good case?
- If you do file a lawsuit, will you be satisfied with a settlement or an opportunity to have mediation instead of a full court ruling?
- In the case that you do win a lawsuit in court, will you actually be able to collect the judgment you receive?
To determine if you have a good case and a good chance of winning the lawsuit, there is a checklist you can follow. This will vary depending on the individual circumstances of your lawsuit. Keep in mind that most cases in the U.S. legal system are settled outside of court instead of being brought before a judge. The best course of action is often to get together with the other party and see if a resolution to the problem can be reached before it goes to court.
No matter how good your case may be, consider how likely it is that you will receive money from the defendant even if you do win the lawsuit. If they have no way to pay you, all you will have left is a sense of victory for having won in court — and you will still have to pay your court fees, plus potentially an attorney as well.
The court can't help you collect the money you are due. If the defendant cannot pay, your next step is to go to the sheriff's office and ask for help with collecting on your judgment. This may include garnishment of wages, liens on the defendant's property, or collection of money directly from the defendant's business. However, if it's not likely that your defendant will be able to pay, you may want to reconsider filing the lawsuit in the first place.
What Can You Sue For?
When suing for breach of contract, there are several types of damages you can sue for. These include:
- Compensatory damages, which are intended to bring the plaintiff to the same point as they would be if the contract was fulfilled.
- Consequential damages, which include lost profits when the other party was aware that you needed them to fulfill the contract in order to earn profits from your business.
- Liquidated damages, a clause for which is often included n the contract; it states the amount of damages that will be paid if the contract is breached.
- Injunctions and Equitable Relief, which takes the place of a cash payment in a judgment and involves forcing the other party to either stop an action or take an action.
When to Sue for Breach of Contract
In most states, the Statute of Frauds states which kinds of contracts have to be in writing in order to be legally enforceable. These include:
- Real estate sales
- Agreements to pay another person's debt
- Any contract that takes over a year to fulfill
- A property lease for a year or more
- Any contract that involves a certain amount of money, which is determined by the state
- Contracts that continue to exist beyond one of the parties' death
- Contracts that involve the transfer of property when one of the parties dies
Another rule affecting your ability to sue for breach of contract is the statute of limitations. This states a deadline for filing a lawsuit, and it depends on the individual case circumstances.
Where Do You Sue for Breach of Contract?
Small Claims Court is recommended if the amount of your loss falls within the limits set by the state. In most states, this ranges from $1.500 to $15,000. It's a fairly simple process, with the judgment taking place right away and limited right of appeal.
In a small claims court, attorneys are not typically involved, procedures are informal, and as long as you have thorough documentation, it should not be difficult to prove your case.
If your claim is more than the small claims court allows, you may sue the other party in a civil trial court, for which an attorney is recommended.
If you need more information or help with how much can you sue for breach of contract, you can post your legal need on UpCounsel's marketplace. UpCounsel accepts only the top 5 percent of lawyers to its site. Lawyers on UpCounsel come from law schools such as Harvard Law and Yale Law and average 14 years of legal experience, including work with or on behalf of companies like Google, Menlo Ventures, and Airbnb.