Breach of Contract Attorney in San Jose, California

If you run a business, chances are fairly high that, at some point, you’re going to have to enter into contractual agreements with other persons or entities to supply products or services for the operation of your enterprise.

If you run a corner grocery store, you no doubt will have to rely on suppliers to bring the produce and other food items to your store for resale. Many businesses will also rely on outside entities to manage their payroll, accounting, and taxes. The examples can be fairly extensive.

In all of these cases, these agreements take on the legal form of a contract. A contract is basically a mutually agreed-upon promise: “I’ll deliver 200 heads of lettuce to your store each week, and you will pay me X amount dollars for this service.” Therein lies a contractual obligation.

Now, if the delivery service fails to make the delivery, or the store owner fails to pay for the heads of lettuce, then a breach can be said to have occurred. A breach of contract, if not resolved mutually between the parties, can lead to civil action by the aggrieved party. This is what is known as a breach of contract lawsuit.

If you own and operate a business in or around San Jose, California, and your business has suffered a breach of contract by one of your suppliers or service providers, contact us at Mosaic Law, P.C. We understand all aspects of California contract law. We will assess your situation, explain your options to you, and help you seek to resolve the situation at hand.

Mosaic Law, P.C. proudly serves clients throughout South County, Santa Clara Valley, and the Santa Cruz Mountains.

What is a Contract Under California Law?

In the Golden State, a contract is defined under the California Civil Code Sections 1619-1632. The code says that a contract can be either express or implied. Express means it is “stated in words.” Implied means it is “manifested by conduct.” Stated in words can further mean that it is either written out or agreed upon orally. Section 1622 says flatly that “All contracts may be oral,” except when required by statute to be in writing, such as a contract for the sale of a home.

A contract must have certain elements to it in order to be considered valid. Legal scholars sometimes break down the elements a bit differently, but the four basic components of a valid contract are:

• OFFER: One party approaches another party with an offer; for instance, to buy or deliver heads of lettuce, to borrow from our earlier illustration.

• ACCEPTANCE: The other party must agree to the offer.

• CONSIDERATION: For providing the services or products contained in the offer, the other party must be given a form of consideration, which could be money (X dollars for 200 heads of lettuce), or an exchange of services. Then, both parties are obligated by the terms of the agreement.

• CAPACITY: Each party must have the legal and mental/physical capacity to carry out its obligation. “Legal” generally means 18 years of age or older, and “mental/physical” means to be of sound mind when entering into the agreement. A party to the offer cannot be intoxicated, high on drugs, or mentally incapacitated to the point of losing judgment. There can also be no coercion or threats involved.

Types of Breaches of Contract

Breaches are generally broken down into minor and major. A minor breach might occur if, using our earlier example, the lettuce delivery service was only able to bring 50 heads of lettuce to the market that week because of weather conditions. A major breach would be to deliver none at all and offer no alternative solution, such as, “I’ll have them to you by Monday.”

A minor breach generally does not threaten the continuance of the contract, whereas a major breach often will. If the delivery service can no longer bring the heads of lettuce to the store, that will open the store owner to serious losses of revenue and also force the owner to find alternative sources. This could lead to a civil action for the recovery of damages.

Anticipatory Breaches

An anticipatory breach occurs when one party to a contract announces through words or actions that it cannot or will not be able to live up to its obligation. The lettuce delivery service may say, “We can no longer bring you the produce we promised.” Or the store owner may learn that the produce provider has gotten a better deal elsewhere and is jumping ship to make more money.

An anticipatory breach generally allows the other party — the one expecting the breach — to take immediate legal action. But if this case involves the sale of products, the Uniform Commercial Code (UCC) kicks in, and the party anticipating the breach must give the other party 30 days to provide reassurance that the contract will be honored. During those 30 days, no payments need to be made, and after 30 days, if no reassurance is given, the contract is officially breached.

Proving a Breach of Contract Has Occurred

Four elements must be shown in court to prove that a breach has occurred:

• A valid contract existed

• You honored your part of the contract, or had a valid reason not to

• The defendant failed to honor their part of the contract

• The defendant’s actions or inactions led to damages on your part

The defendant will often argue that a valid contract never existed. Proving the first element can thus be a challenge if the contract was merely agreed upon orally or came about because of the continuing conduct of both parties. The best way to protect yourself in any business agreement is to have a solidly crafted and clearly stated written contract.

Potential Damages Available

Section 3300 of the California Civil Code states that damages should consist of "the amount which will compensate the [plaintiff] for all the detriment proximately caused" by the defendant's breach, or the amount that, "in the ordinary course of things, would be likely to result therefrom."

In other words, the damages should restore the aggrieved party to the same position had no breach of contract occurred.