QUICK LESSON IN BREACH OF CONTRACT
Paul P. Cheng, Esq.
This quick summary is being sent as a memorandum to help other attorneys in understanding what a breach of contract is. Please continue to contact us with your questions or issues. This analysis is what we use in our offices when we approach any breach of contract case. The elements for breach of contract are strictly construed. It is imperative that you do not skirt around the elements when analyzing your client's case.
ELEMENTS OF A BREACH OF CONTRACT
1) INITIAL INFORMATION
In a breach of contract action, the plaintiff must plead the existence of a contract and its terms that establish the obligation at issue. The complaint must indicate on its face whether the contract is written, oral, or implied by conduct. If the action is based on an alleged breach of a written contract, the terms must be set out verbatim in the body of the complaint, or a copy of the written contract must be attached to the complaint and incorporated by reference.
2) PLAINTIFF'S PERFORMANCE OR EXCUSE FOR NON-PERFORMANCE
The plaintiff must prove that he has fulfilled his obligations and complied with any and all conditions and agreements of the contract that he is required to perform. If plaintiff was unable to perform because defendant prevented him from doing so, plaintiff must allege such excuse for non-performance in the complaint.
3) DEFENDANT'S BREACH
A breach is defined as defendant's unjustified or unexcused failure to perform. BAJI 10.85(3). The plaintiff must plead the facts constituting the breach in unequivocal language.
4) RESULTING DAMAGE
Any breach, total or partial, which causes a measurable injury, gives the injured party a right to compensatory damages.
SO WHAT HAPPENS WHEN YOU CAN PROVE THE ABOVE ELEMENT AND IT CAN BE CONCLUDED THAT THERE IS A BREACH OF CONTRACT?
Generally, Compensatory Damages - the measure of damages for breach of contract is the amount which will compensate plaintiff for all detriment proximately caused by the breach or which, in the ordinary course of things, would be likely to result from the breach.
Other factors that need to be considered are:
• Certainty - damages must be clearly ascertainable in both nature and origin; but the fact that amount of damage is not susceptible of exact proof or is uncertain, contingent, or difficult to ascertain does not in and of itself bar recovery.
• Restoration - damages for breach of contract ordinarily include all amounts necessary to place plaintiff in same position as if breach had not occurred.
• Lost Profits - Note future profits can be recovered to extent they can be estimated with reasonable certainty; lost profits are recoverable to extent they are natural and the direct consequence of the breach.
• Rescission and Restitution - rescission and restitution are alternative remedies in action for damages where there has been repudiation or material breach of a contract, transfer of unique goods is involved, other remedies are inadequate, subject of contract still exists and interests of innocent purchasers for value and defendant's creditors will not be unjustly affected.
• Specific Performance - Note: specific performance is granted only when money damages are inadequate.
• Real Property - specific performance is given in land sale contracts on the assumption that every piece of property is unique and money damages are therefore inadequate.
• Injunction (Very Limited Availability) - injunctive relief is largely within discretion of the trial court, considering inadequacy of damages to plaintiff, as well as harm to defendant.