Not Fulfilling a Contract: Everything You Need to Know
Not fulfilling a contract is if one of the parties has failed to meet their contractual obligations and it can result in serious consequences such as lawsuit.3 min read
Not fulfilling a contract, which is also known as a breach, can result in serious consequences, including a lawsuit. When a contract is not fulfilled, it means one of the parties has failed to meet their contractual obligations.
Basics of Breach of Contract
A breach of contract occurs when a contract has gone unfulfilled. Generally, a breach occurs when one of the parties neglects their responsibilities as outlined in the agreement. Not fulfilling a contract can also involve someone interfering with a party's ability to complete their duties. Entire contracts can be breached, and contracts can also be breached in part.
Typically, a contract ends when both parties have upheld their responsibilities. Unfortunately, it's very common for one party to neglect fulfilling their end of the deal.
When a contract dispute ends up in court, it is almost always for a breach of contract. Four requirements are necessary before a contract will be enforced by the court:
- A valid contract must exist, meaning the agreement must include all necessary elements.
- The party filing the lawsuit must clearly demonstrate that a breach has actually occurred.
- The plaintiff needs to have fulfilled their contractual responsibility.
- Before filing their claim, the plaintiff must alert the defendant that they've breached the contract. This notification should be in writing.
When sued for breach of contract, the defendant has the right to explain why they believe that no breach has occurred or that the breach should be ignored. A person can use several possible defenses when they've been sued for not fulfilling a contract.
First, the defendant could claim that the contract was a result of fraud, meaning the plaintiff either lied while the contract was being negotiated or withheld a vital piece of information. The defendant will need to show that the fraud was intentional for this defense to be effective.
Claiming duress is another possible defense in a breach of contract lawsuit. Essentially, this means that the defendant was coerced into entering the contract, whether through threats or physical intimidation. Proving duress would make the contract invalid, as a legal contract only exists if both parties have consented of their own free will.
Undue influence is another breach of contract defense. If one party had advantage over the other and used that advantage to force them into a contract, the contract would not be legally binding.
Generally speaking, if the defendant makes a mistake related to the subject matter of the contract, this wouldn't make the contract invalid, meaning it couldn't be used as a defense for not fulfilling a contract. Proving that both parties made a mistake, however, may make the contract invalid.
In certain circumstances, a statute of limitations may apply to breach of contract. If the plaintiff waits too long to file their lawsuit, the court may throw out the case because the statute of limitations has expired.
Breach of Contract Remedies
If the court finds that a contract was valid and that a breach did occur, the plaintiff can be compensated in several ways. This compensation is known as a remedy. In most cases, a monetary payment will be the remedy for a contract breach. Damages, a sum of money meant to make up for the plaintiff's loss, can also be awarded for a breach of contract.
If the court finds that the contract was breached intentionally, the court may award punitive damages, which are meant to punish the plaintiff for their bad actions. An injunction is another breach of contract remedy. Injunctions are granted by the court to prevent the defendant from causing further damage to the plaintiff.
Finally, it's possible that a rescission of contract will be ordered by the court. This remedy will be awarded when the plaintiff has suffered so much harm that the court decides terminating the contract is in their best interest. Generally, rescission of contract is only awarded in the most severe cases.
Ideally, when two parties enter a contract, both will benefit, and there won't be any disputes related to the agreement. Unfortunately, this ideal doesn't always reflect reality, and not fulfilling a contract occurs with surprising frequency. When entering a contract, both parties should be aware of the possibility that the contract will be broken and that litigation will follow.
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