Contracts serve as the foundation of all business transactions, and any failure by a party to fulfil their contractual obligations can cause significant disruptions and far-reaching consequences for everyone involved. In Florida, a breach of contract can occur both within and outside a company when a party fails to meet one or more of their contractual obligations.
Commercial or business-to-business examples of a breach of contract can include a failure to pay for goods or services, delivery issues including timing and location, the quality or quantity of goods sold and purchased, the availability of leased spaces, machinery, or other products, and much more.
A breach of contract can have significant and far-reaching consequences for a business, leading to a loss of customers, business opportunities, productivity, and products. Such wilful malfeasance by one party can cause a ripple effect of long-term problems, not just for business owners but also for their employees and their families.
An example of an internal breach of contract could be when employees fail to comply with non-disclosure agreements, deliberately share confidential information, withhold required information, or mismanage company assets.
When the other party has breached a contract, you may have a valid claim for damages. It is advisable to seek the guidance of an experienced contract attorney who can evaluate the specific circumstances of your case and advise you on the next course of action. They can provide valuable insights into the legal remedies available to you and assist you in pursuing your claim in the most effective manner possible.
The Campbell Law Group can help you analyze your breach of contract claim and guide you to the best possible course of action for your business.
What Constitutes a Breach of Contract in Florida?
Every state across America has its own breach of contract laws, and Florida is no exception. It’s important to understand what actions constitute a breach of contract in Florida. Here are some of the most common types of breaches:
- Failure to deliver goods or payment for goods.
- Failure to pay rent on time.
- Failure to provide an agreed-upon service.
- Violating a non-compete clause by leaving a job and joining a competitor.
- Disclosing confidential information as part of a confidentiality agreement
- Anticipatory breach (announcing your intention not to fulfill your obligations as stated in the contract).
- Misrepresenting the value of the collateral used to secure a loan and ensure repayment.
Florida breaches of contract can vary in complexity, with some being straightforward while others are more complicated. To establish a breach of contract in Florida, several elements must be satisfied, including:
- Having a valid contract in place.
- Evidence the contract was breached.
- Demonstration of damage incurred as a result of the breach.
What Constitutes a Valid Contract?
Legal Information Institute (LII) states that the following elements must be present for a contract to exist:
- A valid offer
- Adequate consideration
- Legal execution
In Florida, verbal contracts are legally binding, meaning a disagreement with the other party could lead to a case, despite the absence of a written agreement. Nonetheless, demonstrating a breach of contract in the absence of a written document may be more difficult, though it is not insurmountable.
Types of Contract Breaches in Florida
There are several types of contract breaches that can occur in Florida:
Minor or Non-Material Contract Breach
A non-material contract breach is typically considered a minor failure to perform a contractual obligation. It occurs when the parties involved perform according to the terms of the agreement, but one party fails to meet a non-critical obligation. For example, if a shipment arrives late but does not significantly impact the overall contract’s performance, it is a non-material breach.
Material Contract Breach
On the other hand, a material breach occurs when a party fails to carry out the main obligation stated in the contract. This type of breach is significant and can impact the overall performance of the contract. For instance, if you hire a contractor to remodel your office but fail to do any work, it is a material breach of the contract.
An anticipatory breach can occur when one party indicates that they are unable or unwilling to fulfil their future contractual obligations. This type of breach happens when one party declares its intention not to perform the contract’s terms before the actual breach occurs. The non-breaching party can potentially sue for breach of contract even though the breach of contract has technically not yet occurred.
An actual breach refers to one party’s failure to uphold its obligations as stated in the contract. The breach has already occurred, and the breaching party either performed their duty incompletely, improperly or not at all. An actual breach is a violation of the agreement and gives the non-breaching party the right to seek damages.
Types of Damages You Are Entitled to for a Breach of Contract.
Typically, the non-breaching party is entitled to compensatory damages, which is basically an amount awarded to the non-breaching party to place that party back in the same or a similar position as prior to the breach. Additional types of damages for breach of contract include specific performance, rescission, nominal, liquidated, and punitive damages.
Specific performance is requiring someone to comply with the terms of the agreement. For instance, the seller of a property would like to back out of the contract and give you your money, however, you insist that you do not want your money back, nor do you want damages caused by the seller, you want the house in which you contracted to purchase.
Rescission means that the Court will allow a party to unwind or void the agreement. Rescission is often used in merger or equity purchase agreements, wherein the non-breaching party would be in a better position if the agreement was undone, as the non-breaching party may stand to gain more from the unwinding of the agreement in terms of getting the original investment amount back and/or lack of requirement to continue with the original terms of the agreements which include the non-breaching party’s additional obligations under the agreement.
Another permitted type of damage or relief that can be sought by the non-breaching party is nominal or liquidated damages when the non-breach party is unable to prove compensatory damages, the non-breaching party may still be entitled to nominal or liquidated damages. Nominal and liquidated damages are usually an estimation of the actual harm that was done as a result of the breach. Liquidated damages are contract terms in which the parties already determined that in the event of a breach of this agreement or specific provision, the parties have agreed that the liquidated damages amount contained in the agreement is an estimation of the harm to the non-breaching party in the event of a breach.
On rare occasions, a non-breaching party may be entitled to punitive damages, which is reserved for the most repugnant behavior such as gross negligence, recklessness, or intentional behavior towards the other party. Punitive damages are only awarded when the jury or judge is attempting to “punish” the breaching party and send a message, rather than make the non-breaching party whole.
Understanding the different types of contract breaches is crucial for anyone involved in a contractual agreement. If you suspect a breach has occurred, acting promptly and seeking legal advice is crucial.
Remember that a well-drafted contract can minimize the risk of breaches, but it is not foolproof. When breaches occur, it is essential to have legal representation to protect your rights and seek the appropriate remedy.
If you believe your business has suffered a breach of contract, the Campbell Law Group can provide valuable assistance by analyzing your claim and advising you on the optimal course of action.
Located in South Florida, we proudly serve businesses in Miami Dade, Broward, and Palm Beach Counties. We also take cases further afield, including Tampa, Orlando, Jacksonville, and all corners of the state. If you have a breach of contract that may require litigation, put our ample experience to work for you.
Contact us today to set up a consultation.
Frequently Asked Questions
How should I handle a breach of contract?
It can be frustrating when the other party fails to fulfill their contractual obligations, especially when you have acted in good faith. Ultimately, the decision of how to handle a contract dispute rests with you. In case of minor damages, it may be possible to resolve the issue through mutual agreement with the breaching party, and a lawsuit may not be necessary. However, if an agreement cannot be reached, seeking legal counsel may be necessary, particularly if the damages suffered are significant and the breaching party is uncooperative.
How long does a breach of contract claim take?
No two breach of contract cases are the same. In some instances, the parties can come to a quick out-of-court settlement in just a few weeks. However, if the case progresses through the legal system, it could take many months or even years. If the parties cannot agree with mediation or arbitration, there could be a trial. When any type of civil lawsuit goes to trial, it could take two years and even longer to resolve.
What is the Florida Statue of Limitations for breach of contract?
If someone wishes to file a lawsuit against another party for breaching a written contract in the state of Florida, they must do so within five years of the breach occurring. If the lawsuit is not filed within this time frame, the claim may be time-barred, meaning that the person can no longer seek legal action to enforce the terms of the contract or recover damages. It is important to note that the statute of limitations may vary depending on the specific circumstances of the case and the type of contract involved. Therefore, consulting with an experienced attorney to understand the applicable time limits is advisable to ensure that legal action is taken within the required timeframe.