California Breach of Contract Law Simplified

The basic rule is that parties to a contract must perform as specified in the contract unless (1) the parties agree to a change in the contract's terms, or (2) the actions of the party who deviates from the terms of the contract are implicitly accepted ("ratified") by the action or non-action of the other party.

If there is no acceptance of deviation from the terms of the contract, and the deviation is serious enough to make any real difference in the intended result of the contract, then the deviating party is said to have breached the contract.

Of course if one party fails more or less entirely to perform the contract, or totally prevents the performance of the contract by the other party, the situation is straightforward. The situation becomes more complex where the argument is over such things as the quality of materials, the timing of work, or the quality of the work performed when the contract involves services.
 
Breach of contract leaves the nonperforming or improperly performing party open to a claim for damages by the other party.

The aggrieved party, to help support his/her claim for breach, should have done all the things required of him/her under the contract up until the time of breach, and must have done nothing to make it impossible or unreasonably difficult for the other party to perform his/her responsibilities under the terms of the contract.  

There are so many ways for non-performance of a contract to occur that the courts have been forced to analyze the matter in much more subtle terms than "breached" or "not breached." contracts. 

The doctrine of "substantial performance" saves a party who has largely fulfilled his obligations under a contract from suffering major loss merely because he has unintentionally fallen short in some particular aspect which does not affect the essence of the contract. 

The ordinary remedy for breach of contract is money damages. 

Some contracts go so far as to include an agreement on a set amount of "liquidated damages" which are to be paid in case something goes wrong. These are acceptable to the courts as long as the amount of liquidated damages is a reasonable estimation of the harm that would be done by the breach. If the amount is so excessive as to amount to a penalty or fine rather than compensation for harm the courts will ignore the liquidated damages clause and assess damages by actually measuring at trial the financial harm done by the breach. 

If you want to be able to collect attorney's fees in the event of a breach of contract, there must be an attorney's fees provision in the contract. 

If you and the other party live in different geographical jurisdictions, you should try to include a provision that says that the contract is to be enforced under the laws of your jurisdiction. This makes it possible for any litigation concerning the contract to take place in a court near your home. 

The purpose of damages in breach of contract actions is to place the injured party in as nearly as possible the same position he/she would have been in had the contract been properly performed, and at least to restore him/her as nearly as possible to the position he/she would have been in had he/she made no contract at all. In other words, no one should suffer loss because another has failed to perform a contract properly. 

Where nonperformance is total, for example, the damaged party should get back any money he has paid, along with additional money to compensate him for any actual financial loss that resulted from the nonperformance. The loss must have been a reasonably foreseeable result of the nonperformance.

Do not expect, however, to receive money damages designed merely to punish the breaching party for dishonesty or bad behavior. Such "punitive damages", which are possibilities in some suits for personal injury and other wrongs, are not available in breach of contract actions. Of course if you can allege that you were defrauded, for example, then you are suing for wrongdoing beyond the breach of contract, and you may receive punitive damages.

 

 




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