Contracts are essential in the business world. They govern things like sales, services, employment, payment of debts, and more.
Contracts help make your business transactions predictable. If someone contracts with you to provide a good or service, you should be able to count on them to follow through.
Unfortunately, whether intentionally or unintentionally, not everyone comes through on their contractual obligations. When this happens, it can cost your business time, money, and other resources. It may even prevent you from fulfilling your own contractual obligations to others.
Contract law can be complex. If someone breaches a contract with you, they will likely exploit any available loophole to try to avoid their obligations. To protect your contractual rights, you need an experienced contract attorney on your side to help you hold the breaching party accountable.
What Are the Elements of a Breach of Contract Claim?
To demonstrate that someone has breached a contract, you have to prove:
- A contract exists,
- The other party breached the contract, and
- You suffered damages as a result of the breach.
Each of the elements of a breach of contract claim has several facets that your attorney may need to explore.
Breach of Contract Element #1: Proving that a Contract Exists
The first thing you have to prove for breach of contract in Michigan is that a valid contract existed. If the other party is trying to avoid their obligations, they may argue that there was a flaw in the contract that makes it unenforceable.
Offer and acceptance
To create a contract, one party must make an offer that the other party accepts. The offer and acceptance need to be detailed enough that a court can determine what the parties are exchanging. However, a contract can be enforced even if some of the terms are indefinite.
Meeting of the minds
To have a valid contract, the parties must have a “meeting of the minds.” This means that the parties both understood what they were agreeing to and intended to be bound by it.
But just claiming you didn’t understand the contract or thought it meant something different is not enough. To determine whether there was a meeting of the minds, the court will look at the language of the contract itself to determine what the parties understood.
If the language of the contract is unambiguous, the court will enforce it even if one party claims they understood the terms to be something different from what was written. But if the language of the contract is ambiguous and the parties understood it differently, the court may not enforce the contract.
Parties to a contract must be capable of understanding what they are agreeing to. A contract may not be enforceable if one of the parties was mentally incompetent. Additionally, if a party to a contract is under the age of 18, the contract may be invalidated in most situations.
You cannot enter a contract to do something illegal. Illegal contracts are unenforceable.
All contracts must have what is called “consideration.” This means that the contract must benefit both parties in some way. For example, if I promise to paint your house in return for $100, that contract would be enforceable, because we would both benefit. But if I promise to paint your house for free, you would not be able to enforce that promise as a contract.
When it comes to contracts, it’s always sound advice to “get it in writing.” While courts can legally enforce many types of oral contracts, it is always more difficult to prove the terms of an oral contract.
Additionally, the statute of frauds prevents courts from enforcing certain types of contracts unless they are in writing. Michigan contract law applies the statute of frauds to contracts:
- Regarding the sale or purchase of real property;
- That can’t be completed within a year;
- Guaranteeing a debt;
- Made in consideration of marriage;
- To pay damages out of an estate; or
- For the sale of goods over $1,000 (with some exceptions).
If you do have an oral contract, it is best to speak to an attorney to help you determine whether the contract is enforceable.
Breach of Contract Element #2: The Other Party Breached the Contract
To prove a breach of contract in Michigan, you must establish that the other party failed to fulfill their contractual obligations in a material way. However, there are a number of defenses to breach of contract that you may need to anticipate. Your attorney can help you anticipate these defenses and determine how best to combat them.
A breach must be material to be actionable. A material breach goes to the heart of the contractual agreement, such as a complete failure to perform an obligation. Minor failures, on the other hand, may not be material.
For example, let’s say you contracted for someone to build you a deck, and the contract called for them to use a certain type of material. If the builder was unable to get that material and substituted a material of equal quality, that may not be considered a material breach.
First Breach Doctrine
If one party has materially breached their contractual obligations, this excuses the other party from fulfilling their obligations. A defendant may try to avoid responsibility for their contractual obligations by claiming that you did something to materially breach the contract first.
In some circumstances, a party may claim that forces outside their control made the contract impossible to perform. For example, if a hurricane destroyed a supplier’s warehouse, they may not be able to fulfill their supply contracts.
Sometimes a contract anticipates these situations by explicitly stating that one party assumes the risk of such an occurrence.
Breach of Contract Element #3: You Suffered Damages
The final element of a breach of contract claim is damages. Even if you can prove that the other party materially breached a contract, you must prove that the breach actually damaged you.
For example, let’s say a catering company backed out of an agreement to provide 1,000 meals for an event you were planning. If you were able to find another company to provide the same meals for the event at the same price, it will probably be difficult to show that you were damaged by the caterer’s breach.
What Is the Michigan Breach of Contract Statute of Limitations?
If you have suffered from a breach of contract, it is important that you act quickly to preserve your claim. The Michigan breach of contract statute of limitations gives you six years to file most breach of contract claims.
However, Michigan contract law provides different limitations periods for a few specific types of contracts, ranging from two to ten years, so it is important to consult a contract attorney to determine which limitations period applies to your claim.
How Can the Miller Law Firm Help with a Breach of Contract in Michigan?
The Miller Law Firm represents both individuals and businesses of all types and sizes. We have a strong track record of success in business and commercial litigation, and we know the ins and outs of contract law. We have recovered over $3 billion in damages on behalf of our clients. Call or contact us today to tell us more about your case and learn what we can do for you.