As with nearly everything else, the Covid-19 pandemic has left its mark on contracts of all types.
The business world and your daily life are filled with contracts, whether you realize it or not: Employment agreements, purchases of household goods or services, gym memberships, construction contractors, daycare, and countless other examples.
The Covid-19 pandemic moved swiftly and overwhelmingly, leaving countless parties in breach of agreements and often causing confusion on all sides.
One result is a rise in suits with plaintiffs alleging breaches of contract and defendants claiming to have taken every step possible in reacting to an unforeseeable and worldwide calamity that was well beyond their control.
While on its face the pandemic may seem to be an exceedingly rare circumstance that means the norms of business and legal obligations no longer apply, that’s not necessarily the case.
Certainly, Covid-19 has had a widespread impact, but that doesn’t mean laws – including those related to contracts and breaches of contracts – are out the window.
Contracts, breaches of contracts and the effects of the pandemic on them may be complex, but they can be broken down and clarified.
The better you understand these elements and obligations, the more successful you’ll be in either avoiding a breach of contract or recognizing when someone has breached a contract with you.
The Essential Elements of a Breach of Contract Claim
First, it’s important to understand what constitutes a breach of contract. While laws may vary slightly from state to state, there are four essential elements to a breach-of-contract claim:
A Contract Must Exist
This may sound simple, but a signed piece of paper or oral agreement may not be recognized by the courts as a valid contract. A valid contract must include:
- An offer: One party must make an offer. An offer by a contractor to install Plexiglas dividers in an office building would include details on the specifications, placement, price, due date and other details.
- Acceptance of the offer: The other party (the building owner in this example) must then agree to the offer or provide a counter offer until both sides agree to all details.
- Consideration: This is the benefit each of the parties in the contract will receive. Generally consideration is a product and/or service from one party and a form of monetary payment from the other.
Proof that the plaintiff either performed his or her contractual obligations or has a legitimate reason for not doing so
This means that, while you may not have executed the precise details of the contract “to the letter,” you did make certain to deliver what is legally referred to as “substantial performance.”
That is, you essentially met your obligations.
Of course, if this is the case, the other party in your contract may not be required to fully perform their obligations.
For example, you agreed to paint the dining room of a restaurant with a certain number of coats of paint, a specific color, by a certain date for a specified payment.
But if you finished the work three days late and the restaurant owner could not open the restaurant for three days, then the owner may ask to pay less.
Prove the other party in the contract did not perform their part of the contract
Both parties to a contract are legally expected to perform their contractual obligations.
For example, in the above example, if you painted the restaurant the agreed upon color, with the specified number of coats of paint, and finished the work before the due date, you performed your obligations.
If the restaurant owner fails to pay the agreed upon amount, he or she has not performed his or her obligations.
Prove the other party’s failure to perform caused you damages
The point of a contract is to clearly specify what each party is expected to deliver as part of the contract.
If you perform your contractual obligations and the other party does not pay you, then your damages are at the least the payment you were contractually entitled to receive.
But it’s important to understand your damages may also include lost business revenue and any costs related to filing the lawsuit.
Stay tuned for part II and contact us today if you believe you were a victim of breach of contract for a free consultation.