Miami Breach of Contract Attorneys | Romano Law

Breach of Contract – Miami

When parties enter into a contract, they make a promise to each other to abide by the terms of the agreement.  If one side fails to meet its obligations, that party may be liable for breach of contract. However, it is not always clear when someone can sue for breach and recover damages.  The plaintiff must meet the applicable federal or state law requirements for bringing an action.  The basic rules in Florida are similar to those of other states, but it is important to consult an experienced Florida attorney to provide the right guidance and representation in a breach of contract case.

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WHAT CONSTITUTES A BREACH OF CONTRACT IN FLORIDA

Breach of contract actions generally require proof of the same elements regardless of the type of contract.  Under Florida law, a plaintiff must establish: (1) the existence of a valid contract, (2) “material” breach of an obligation under the contract by the other party and (3) damages resulting from the breach.  As part of this, the plaintiff must also show that it substantially met its obligations under the contract and all conditions existed for the defendant to meet its obligations.  Further, the defendant must have failed to perform or violated an essential requirement of the contract resulting in harm to the plaintiff.

WHAT ARE THE DIFFERENT TYPES OF CONTRACT BREACH?

A party can breach an agreement in several ways, and not all breaches are treated the same under Florida law.  Below are some examples of breaches and the legal consequences of each.

  • A material or total breach. A material breach occurs when the breach is so significant that the contract obligations can no longer be fulfilled.  Put differently, a material breach occurs when a breach is so substantial that it can absolve the non-breaching party of their obligations under the contract.  In the event of a material breach, the non-breaching party is entitled to stop performing their obligations under the contract and can sue for breach of contract damages.
  • A minor or partial breach. A minor breach arises when a party does not breach the whole contract but fails to perform a certain portion of the contract.  The minor breach must not prevent the parties from completing the rest of their obligations under the contract for it to be considered minor.  If there is a minor breach, the non-breaching party must continue to fulfill its obligations under the contract, and it may sue for damages.  Although Florida law requires “materiality,” there are still cases where a minor breach may still be grounds for litigation.
  • Anticipatory breach or anticipatory repudiation. An anticipatory breach occurs when one party to the contract informs the other party – either through words or actions – that it will not be able to fulfill its contractual obligations.  When there is an anticipatory breach, the non-breaching party should avoid incurring extra costs or expenses.  If the non-breaching party does not attempt to mitigate their damages, it may not be able to recover the additional damages that it incurred.

WHAT ARE THE CONSEQUENCES OF BREACHING A CONTRACT IN FLORIDA?

If a plaintiff successfully proves that the defendant breached a valid contract, there are several ways a court could remedy the breach.  Remedies a court may award include:

  • General or compensatory damages. General or compensatory damages are designed to put the non-breaching party in the same place it would have been if the breach had never occurred.  An example of compensatory damages is the reimbursement for goods or services purchased in order to replace the goods and services that should have been provided by the breaching party under the contract.
  • Special or consequential damages. Special or consequential damages are related to the breach of contract “without direct correlation.”  An example of consequential damages that a court may award is reimbursement for lost business due to the breach.  To obtain these damages, the injured party must show that it was damaged either as a direct result of the breach or that the damages were reasonably foreseeable because of the breach.  In Florida, the most litigated type of consequential damages is for lost profits.
  • Nominal damages. Nominal damages are damages that are awarded when there was a breach of contract, but no real harm resulted from that breach.  These damage awards are very small, sometimes $1 or $10, and are granted to show that the non-breaching party was “in the right.”
  • Liquidated damage awards. The parties’ contract may provide for “liquidated damages.”  Liquidated damages are the amount the parties have agreed to pay in the event of breach.  Florida courts will only award liquidated damages if they are agreed to in the contract.  Liquidated damage provisions are often included in contracts where it would be difficult to quantify the amount of damages in the event of a breach.  Courts will enforce liquidated damage provisions when they are reasonably related to an anticipated loss caused by the breach of contract.

A party enforcing a contract cannot recover damages that are speculative.  There must be some basis for the damages that the party seeks.

In the United States, each party is expected to bear their own legal fees and costs for breach of contract cases.  However, some agreements provide that the prevailing party in a contract dispute is entitled to recover their legal costs and fees.

In Florida, there is also a duty to mitigate damages.  The duty to mitigate requires the non-breaching party to take action to minimize their losses resulting from a breach of contract.  If the losses incurred by a non-breaching party could have reasonably been avoided, the court may not award damages for that loss.

Generally speaking, courts applying Florida law will not award punitive damages for breach of contract.  However, in a very limited number of circumstances, Florida courts may award punitive damages when the breaching party committed fraud or some other type of egregious conduct.

SPECIFIC PERFORMANCE

Specific performance is when the court orders the breaching party to fulfill and perform their contractual obligations.  Specific performance is typically awarded when money cannot compensate the injured party and when the contractual obligation is unique and difficult to value.

To obtain specific performance in Florida, the non-breaching party must prove (1) there is a valid contract existing between the parties, (2) the non-breaching party is “ready, willing, and able” to perform the contract or already has, (3) the breaching party refused to perform their obligation under the contract and (4) there is no other adequate remedy available.

CONTRACT RESCISSION

Rescission occurs when a court undoes the contract and puts all the parties back to the position they were in prior to executing the contract.  The court typically only grants rescission of a contract when the non-breaching party has no other adequate remedy, and the parties can go back to the position they previously occupied before entering into the contract.  A non-breaching party cannot obtain rescission of the contract and damages – it must choose one of these remedies, not both.

CONTRACT REFORMATION

Contract reformation is a remedy that is rarely granted.  A party seeking reformation is asserting that its contract does not accurately reflect the actual agreement reached by the parties.  This remedy is permitted when the same contractual term was misunderstood by both parties or where one party is mistaken and the other commits fraud or engages in inequitable conduct.

DEFENSES TO A BREACH OF CONTRACT CLAIM IN FLORIDA

There are many potential defenses to a breach of contract lawsuit.  A few of these defenses are:

  • ImpossibilityImpossibility as a defense may be asserted when the purposes for which the contract was made have become impossible to perform.  For example, if a band has a contract to perform at a concert hall and then the concert hall burns down the day before the performance, it is impossible for the concert hall to host the scheduled concert.
  • Lack of capacity.  Capacity is having the legal ability to enter into an agreement.  If one party to the agreement lacked capacity when it entered it, the court will likely not uphold the agreement.  Examples of individuals who lack capacity are children and persons who were intoxicated when they entered into the agreement.
  • Mistake.  A contract may be held invalid if both parties were mistaken of the facts at the time they entered into the agreement.  For example, if both parties mistake the authenticity of a work of art, the transaction may then be undone.  If only one party is mistaken, it cannot always be undone.
  • Unconscionability.  A contract will not be upheld if it is ruled to be unconscionable.  There are two types of unconscionability: procedural and substantive.  Procedural unconscionability is when methods of how the parties entered the contract were unfair.  Substantive unconscionability is when the terms of the agreement are unfair.
  • Illegality Illegality is when the contractual obligation is illegal.  In other words, if the act you are contracting for is an illegal act, then the agreement will not be upheld in court.

CONCLUSION

Breach of contract cases can be costly for both parties.  Consulting an experienced Florida attorney when bringing or defending a lawsuit can help ensure you present a strong case and protect your rights. Contact Romano Law for assistance with your matter.

 

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