Breach of Contract Claims

An experienced trial attorney is often necessary to enforce a contract or assist a plaintiff in recovering damages when a contract has been breached. Under Georgia law, a breach occurs when a valid written or oral contract between two parties is broken by one of the parties. The formation of a contract occurs when a party makes an offer and another party accepts. For a contract to be valid and legally enforceable, there must also be mutual assent. Mutual assent occurs when both parties agree on the terms and meaning of the contract. Typically, another element known as consideration must also be present; this is generally found when both sides have exchanged something of legal value. When a valid contract is formed, both sides are legally bound to the promises they made. A deviation from those promises can result in several options for the injured party.

There are three main remedies for a breach of contract: damages, restitution, and specific performance. The purpose of awarding damages is not to punish the offending party but to place the injured party in the position he would have been in had the contract been performed. An attorney may also be able to obtain consequential damages that occur as a result of the breach, future earnings when an employee contract has been terminated, or the lost profits caused by the breach.
The second type of remedy available under Georgia law is restitution. Restitution attempts to restore the injured party to the position it held before the contract was formed. This allows the injured party to recover the price of materials it used, or services rendered, in carrying out the contract.

Finally, specific performance is another option in some cases. Specific performance forces the breaching party to carry out its contractual obligations. This is an extraordinary remedy a court may grant if the injured party does not have another adequate form of relief. Specific performance is often ordered when a contract for the sale of land has been breached.
In many cases, the two parties will have agreed to liquidated damages at the time a contract was formed. A liquidated damages clause contains a set and definite damage amount that a party agrees to pay if it breaches the contract. Liquidated damages are generally upheld as long as the agreed-upon damage is a reasonable estimate of the harm that a breach would create.

Punitive damages are generally not allowed under Georgia law for a breach of contract. The exception is when a breach of contract involved an intentional tort such as fraud. Even if the defendant breached the contract in bad faith, a Georgia court is unlikely to assign punitive damages in the absence of an intentional tort.

In Georgia, a plaintiff must prove that a contract and all of its relevant terms exist. The plaintiff must then prove that there was a breach of the contract, and that damages occurred as a result of the breach. Additionally, a plaintiff may be required to show that he took steps to mitigate or lessen the harm when the breach occurred, though he is only required to use ordinary care and diligence in mitigating damages. Ultimately, the question of whether there was a breach of contract is for a jury or trial court to decide.

Georgia allows for numerous defenses that could render a contract unenforceable or allow a defendant to repudiate a contract. One of the most basic defenses is to argue that there never was a legal contract. For example, arguing that there was no consideration in the formation of the contract is a valid defense.

A defendant may also try to argue that the plaintiff’s actions released the defendant from fulfilling the promises made in the contract. For instance, nonperformance is a possible defense in Georgia. A defendant may argue that the plaintiff failed to perform his side of the bargain, which then released the defendant of any obligations.

Rescission is also a potential defense. If a defendant successfully argues that both parties had agreed to abandon the contract prior to a breach, the defendant would normally be found not liable.

An unanticipated difficulty could also be used as a defense when a defendant is accused of a breach. Generally, an unexpected problem that arises while a defendant is carrying out his side of the contract is not a strong defense. The exception is if the difficulty in carrying out the contract was due to an “act of God,” such as a natural disaster. In those cases, nonperformance is more likely to be excused.

Fraud is another potential defense. Fraud exists when one party is induced to enter into an agreement due to a misrepresentation made by the other party. However, a defendant that simply fails to read a contract or does not use due diligence to discover the truth is usually not protected by a defense of fraud. Furthermore, opinions that are made to induce another to sign a contract are generally not enough for a court to find that fraud was present.

Georgia law also requires that some contracts be in writing. Examples of these contracts include agreements that cannot be performed within one year, the sale of real estate, and the promise to lend money. If a contract falls within these categories and is not in writing, the contract will probably not be legally binding.

The information provided above is a very general summary of the law of contract breach at the time this text was prepared. Because this analysis is subject to change depending on recent cases and legal developments, you should not rely on this summary as legal advice. As with any important legal question, you should always consult a lawyer licensed to practice in your jurisdiction. Our lawyers are licensed to practice in all state and federal courts in Georgia.