Every time you lease a car, sign up for cell phone service, or engage the services of a tradesperson, you are entering into a contract. A contract is a legally recognized agreement made between two or more people (called “the parties”). When a party to a contract violates the agreement by failing to adhere to the terms of the agreement, this is called a “breach.” A “breach of contract” can be grounds for a lawsuit, even if the contract or agreement was oral and not written.
When is a Contract Valid?
To be valid, a contract requires an offer, an acceptance of that offer, and consideration.
An offer must be a clear, unequivocal, and direct approach from one party to another party to contract. For this reason, advertisements are not offers. The law calls these “invitations to treat”; or invitations to the public to make an offer on a particular item.
An offer, once made, can be revoked before acceptance unless it is under seal. An offer can also expire if a deadline for acceptance passes. If there is no specified deadline, then the offer expires in a “reasonable time”, depending on the subject-matter of the contract.
Once the offer is accepted, a contract exists. The acceptance must be clear and unconditional, and made by the party to whom the offer is made.
Consideration refers to money or payment of money, or some right, interest, profit, or benefit accruing to the one party, or some loss, or responsibility given, suffered, or undertaken by the other.
If someone consents to a contract by mistake, or because of a fraudulent representation of the contents of the agreement, the contract may be declared invalid by a court. Anyone who signs a contract also must be of sound mind for the agreement to be valid. Contracts must be reasonably precise to be enforceable.
Consequences of Breach of Contract
If one of the parties fails or refuses to fulfil its promise (for example, to pay the agreed price for a service, to sell a house as outlined in a purchase and sale agreement, or to pay an employee’s salary), without a valid reason recognized by law, the other party is free to seek a remedy in Court.
There are a variety of remedies available for a breach of contract. The appropriate compensation or remedy depends upon the circumstances. The B.C. Breach of Contract Lawyers at Hoogbruin & Company can provide legal representation in cases where one party fails to fulfill their obligations according to the terms of a contractual agreement.
What are the Remedies Available for a Breach of Contract?
In Canada, the most common remedy for breach of contract is a monetary award also known as damages. Both general damages and indirect damages (also known as consequential damages) can result from a breach of a contract. General damages refer to the loss directly caused by the breach. Consequential damages refer to losses that occur because of the breach, but are an indirect cause. For example, if you own a construction company and you pay for a bulldozer to be delivered and it never arrives, the general damages would include the value of the money you paid for the bulldozer. The consequential damages could include the loss of business caused by the fact you do not have the bulldozer you needed to do your work.
In some cases, the appropriate remedy for a breach of contract is to correct the breach by forcing the breaching party to complete the terms of the agreement. Specific performance is an appropriate remedy in situations where monetary damages cannot make the non-breaching party whole for the losses. For example, if there was a contract created for a buyer to purchase a dream home next to their grandmother, the buyer may not be able to find another home for sale in that specific neighbourhood. The only remedy that would help the buyer in this circumstance is for the Court to require the sale to go through so the buyer got the home he contracted for.
These are the two most common remedies sought by parties for a breach of contract.
How Can Hoogbruin & Company Help?
Under the law, not every agreement is legally binding. Certain conditions must be met for a contract to be deemed enforceable. Furthermore, not all breaches are created equal. Serious breaches, known as fundamental breaches, may have a different effect on what remedies are available to you than if the breach is minor. Finally, inappropriately terminating your own duties in response to the other party’s breach may allow the other party to seek breach of contract damages against you, or limit the types of remedies you can seek against them. It is always a good idea to have a lawyer review a contract and provide advice on your legal options before proceeding with a claim for breach of contract.