If your business has suffered financial damage because another party has breached your contract with them, filing a lawsuit may be in your future. To win your breach of contract case and start your business down the road to recovery, you will need to prove that you had an enforceable agreement with the other party, that the other party breached it, and that you have sustained losses because of that breach.
If the court finds in your favor, you may receive damages intended to make your business whole again, meaning in the same position it would have been before the breach.
In some cases, specific performance of the contract is the appropriate court-ordered remedy, meaning the parties are obligated to perform their duties under the agreement. Specific performance is available when actual performance would be the only remedy that would suffice as damages, such as a contract to buy land. In other instances, cancellation of the entire contract is appropriate.
Proving Enforceable Written and Oral Contracts
To establish the existence of an enforceable contract, whether oral or written, you must show that the agreement contained an offer, acceptance, and consideration. An offer is a proposition by one party to perform an act or refrain from performing an act. Acceptance is the other party agreeing to the offer, and consideration is the value exchanged by each party by entering into the contract.
In Maryland, verbal agreements are enforceable under many circumstances, though some contracts must be in writing to be enforceable because of the Statute of Frauds. One type of contract that must be in writing and that may affect your business is an agreement for the sale of goods for $500 or more, though an exception is made for goods that are “specially manufactured” for one party and that the other party would not be able to resell to others “in the ordinary course of business.”
Other types of contracts that must be in writing include agreements for land sales and land leases lasting for more than one year, promises to pay off someone else’s debts or in consideration of marriage and agreements that cannot be performed within one year of the date of the contract.
For oral contracts, the court must find that the terms of the agreement are clear enough that both parties understand their obligations under the contract and that the court can also glean “the purpose and intent of the parties.”
Overall, though, it is important to recognize that verbal agreements, although often enforceable, can be difficult to prove in court without corroborating evidence. Typical corroborating evidence includes witnesses to the agreement or documentary evidence such as emails, text messages, voicemails, payment slips or other communications that relate to the agreement. If your business has suffered monetary loss because of a breach of an oral contract, it’s important to quickly seek professional advice on how to proceed. Proving that an oral contract existed commonly becomes more difficult as time passes.
Proving Breach of Contract Claim
To show the other party has breached an enforceable contract, generally you must show that one of the following situations has occurred:
- The other party failed to perform according to the terms of the contract
- The other party stated it has no intention of fulfilling its obligations under the contract
- The other party made it impossible for you to perform your obligations under the contract
Statute of Limitations
In Maryland, you must file a breach of contract lawsuit within three years of the date of the breach. The exception to this general rule is that contracts under “seal,” which are those with express language in the document that shows the parties intended to create a sealed document, have a 12-year statute of limitations.
Contracts under seal are also called “specialty contracts,” and Maryland case law provides that the express language to create them might include phrases such as “signed and sealed” and “witness my hand and seal.” Since most ordinary business contracts are not under seal, however, your claim for breach must be filed within the three-year deadline.
Because of this relatively short period of time, you should contact an experienced attorney as soon as possible to determine whether you have a valid cause of action against the other party. The sooner you get your case moving, the faster your business can get back on track after suffering losses caused by someone else. Give us a call at (410) 752-2468 or send us a message to get started.