BREACH OF CONTRACT LAW
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Basic Elements Of A Breach
Of Contract Action
To make out a cause of action for breach of contract requires
a pleading of (a) the contract; (b) plaintiff's performance
or excuse for nonperformance; (c) defendant's breach; and (d)
damage to plaintiff. It is necessary to specify that the contract
is written, oral, or implied by conduct. (C.C.P. 430.10(g),
Written Contracts: A written contract
is usually pleaded by setting it out in its entirety in
the body of the complaint or by attaching a copty. The other
method of pleading is by alleging the making of the contract,
and then alleging the substance of its relevant terms.
“A written instrument is presumptive evidence of
a consideration.” (C.C. 1614.) Therefore, it is not
necessary to plead the existence of consideration to support
Oral Contracts: If oral, the exact words
used can seldom be correctly alleged, and are evidentiary
in nature. Hence, the oral contract is pleaded according
to its legal effect.
But the complaint is subject to a general demurrer if the
allegations fail to show the nature of the contract with
Implied Contract: An implied in fact contract
arises from conduct, without express words of agreement.
Accordingly, “only the facts from which the promise
is implied must be alleged.”
Plaintiff's Performance Of The Contract
The plaintiff cannot enforce the defendant's obligation
unless the plaintiff has performed the conditions precedent
imposed on him. (C.C. 1439) Accordingly, the allegation
of performance is an essential part of the Plaintiff's cause
The rule calls for plaintiff's allegation of performance or an excuse. Performance of conditions precedent
may be alleged generally, but excuses must be pleaded specifically.
Where the defendant's conduct amounts to a prevention of
the plaintiff's performance, the plaintiff cannot allege
due performance and may plead the breach as an excuse. The
general rule, followed in California, treats the excuses
of prevention and defendant's waiver of the right to performance
in the same way, and requires specific pleading of the facts
The facts constituting the defendant's breach must be stated
in a complaint for breach of contract with certainty.
Where the obligation of the contract is to pay money, the
breach consists of nonpayment, and this must be alleged.
But where the contract calls for performance of some service,
delivery of goods, or something other than payment of money,
and the action is for damages for breach, there is no need
for the plaintiff to allege that the defendant has failed
to pay the damages; the demand or prayer is sufficient to
show that they have not been paid. Where the action is based
on an anticipatory breach, the complaint should allege defendant's
repudiation. Negligent acts of performance may also be alleged
as a breach.
Damages To The Plaintiff
The basic object of damages is compensation, and in the
law of contracts the theory is that the party injured by
breach should receive as nearly as possible the equivalent
of the benefits of performance. (See C.C. 3300; U.C.C. 1106(1))
"For the breach of an obligation arising from contract,
the measure of damages, except where otherwise expressly
provided by this code, is the amount which will compensate
the party aggrieved for all the detriment proximately caused
thereby, or which, in the ordinary course of things, would
be likely to result therefrom." (C.C. 3300.)
It is essential to establish a causal connection between
the breach and the damages sought. (C.C. 3300 [compensation
for detriment "proximately caused thereby"]
C.C. 3294, providing for exemplary or punitive damages,
refers to breach of an obligation "not arising from
contract." Hence, such damages are never recoverable
for breach of contract, no matter how wilful or malicious,
except where the wrongful act is also a tort.
C.C. 3301 states that "No damages can be recovered
for a breach of contract which are not clearly ascertainable
in both their nature and origin."
Subject to this limitation, the injured party may recover
for the profits or benefits which he would have obtained
by performance if he can establish them with reasonable
certainty. Such damages may include:
Giving Up Established Business. If the
plaintiff gives up an established business or profession
to enter into new activities by contract with the defendant,
on breach the plaintiff may recover the profit or earnings
he would have made if he had remained in his former business
Future Profits From Existing Business.
"In the one case, the success of the business usually
depends upon a variety of circumstances, and the outcome
is therefore too uncertain to provide a tangible basis
for computation; while in the other, past experience has
demonstrated the success of the enterprise and provides
a reasonably certain basis for the calculation of plaintiff's
probable loss consequent upon the breach." (Hoag
v. Jenan (1948) 86 C.A.2d 556, 564, 195 P.2d 451) On the
other hand, if the anticipated profits were not to come
from an established business or profession, but from a
new business to be established, the difficulty of estimating
them has generally led the courts to classify the damages
as uncertain and speculative, and to deny recovery.
Plaintiff's expenditures. Another measure
of contract damages is the amount of the plaintiff's expenditures,
together with the reasonable value of his own services,
in preparation and performance in reliance on the contract.
This type of recovery is frequently sought or awarded
where, because of uncertainty or difficulty of proof or
other reason, the plaintiff is unable to establish a claim
for lost profits
Mental or Physical Suffering. Ordinarily,
damages are not recoverable for mental suffering resulting
from a breach of contract in the absence of physical injury.
However, where the breach of contract causes physical
suffering or illness, recovery is appropriate. "Whenever
the terms of a contract relate to matters which concern
directly the comfort, happiness, or personal welfare of
one of the parties, or the subject matter of which is
such as directly to affect or move the affection, self-esteem,
or tender feelings of that party, he may recover damages
for physical suffering or illness proximately caused by
its breach."[Westervelt v. McCullough (1924) 68 C.A.
198, 228 P. 734]
Interest. "Every person who is
entitled to recover damages certain, or capable of being
made certain by calculation, and the right to recover
which is vested in him upon a particular day, is entitled
also to recover interest thereon from that day, except
during such time as the debtor is prevented by law, or
by the act of the creditor from paying the debt."
Liquidated Damages. (C.C. 3287(a), "damages
certain" provides for the recovery of damages where
the amount of money due is an amount fixed by terms of
Attorneys' Fees. Attorney fees may not
be recovered where there is no provision in writing for
the recovery of attorney fees in the event of a breach
and suit. Such a provision is commonly found in promissory
notes, conditional sales agreements, deeds of trust, mortgages,
leases and building contracts.
General Procedural Outline:
No two cases are alike and procedures vary
with the nature and complexity of the legal and evidentiary issues
involved. The following is a very general outline of the stages
of a civil action.
Every case begins with the filing and service of a Summons and
Complaint. The Complaint will contain one or more "causes
of action" such as "Breach of Contract" or "Fraud".
Service Of Complaint
After the Summons and Complaint have been filed with the court,
they must be properly served on the defendant(s). If the defendant(s)
will accept service, he/she may sign an Acknowledgment of Service."
Otherwise the documents will have to be formally served.
Response To Complaint
The Defendant(s) have 30 days from the date of service of the
Summons and Complaint to serve on the Plaintiff(s) either an
Answer to the Complaint or a pleading challenging the sufficiency
of the the Complaint. Responses challenging the sufficiency
of the Complaint include a motion called a "Demurrer"
and a "Motion To Strike"
Hearing Of Challenges To Sufficiency
Of Complaint (If Applicable)
If the defendant(s) decide to file a demurrer or motion to strike,
these motions must be heard and ruled upon before the matter
may proceed. This can take up to 2 months. If such motion is
sustained and the court grants leave to amend the Complaint,
a new complaint must be drafted and served and the process starts
over. Sometimes a second demurrer or motion will be filed causing
Once the Complaint and Answer have been filed both parties commence
"discovery" procedures by which the evidence necessary
to prosecute both sides of the case. Depending on the nature
and complexity of the case, one or more of the following discovery
devices may be used by the parties:
Interrogatories: Written questions which must be answered under oath.
Request For Production Of
Documents: Demands for production of documents
by the parties involved.
Requests For Admission: Requiring the parties to say which allegations they affirm
and which they deny.
parties may be required to appear in the opposing attorney's
office to answer questions under oath in front of a court
reporter. Depositions can also be taken from 3rd parties.
Subpoena Documents From
Third Party: Documents may be subpoenad from 3rd
parties such as banks and employers.
Discovery Motions (If
If a party fails or refuses to comply with discovery requests,
it may be necessary for the party propounding the discovery
to make a motion in court to compel responses. If the court
grants the motion, further responses will be made. If those
responses are still inadequate, another motion may be made and
the court can sanction (fine) the resisting party. In extreme
cases the court can even terminate the action in favor of the
Throughout the case the court will set a series of Case Management
Conferences to be attended by attorneys for all parties. These
hearings are designed to determine whether the case is ready
for trial. When the court feels that a case is ready for trial,
it will set the date for trial and make orders concerning completion
of discovery and final preparation for trial.
Settlement negotiations may proceed throughout the trial. Often
the court will require the parties to try a mediation of the
issues or will set a "Mandatory Settlement Conference"
(MSC) before the trial date. Settlement negotiations general
become more intense as the trial date approaches.
The vast majority of cases settle before trial. However if the
parties cannot settle the case, the only way to resolve the
issues is by way of trial.
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