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Can breach of contract lead to general civil litigation?

Contracts form the backbone of commerce in North Carolina and across the nation. From contracts between commercial property owners and builders to contracts between suppliers and manufacturers or even complex contracts involving other aspects of business, such as corporate mergers, entering into contracts is a common business practice.

Therefore, if one party claims the contract has been breached, it can have significant consequences to both sides of the agreement. Both parties may have different opinions about how the contract should be interpreted, and the party claiming breach may want to enforce the contract and be made whole again, while the party accused of breach will want to avoid having to pay the financial consequences that come when a contract is broken. Breach of contract can even lead to general civil litigation. Therefore, it is important to understand how a contract is formed and how it can be breached.

First, it must be shown that a valid contract is in place. To form a contract, one party will make an offer to a second party who accepts the offer. Both parties must negotiate for an exchange of consideration. Consideration is simply something of value that one party will give to the other in return for keeping a promise. Finally, contract terms cannot be so ambiguous as to prevent a court from enforcing them, if necessary.

A contract is breached when one party fails to uphold their end of the bargain. The type of remedy for the breach will depend on whether the breach was material -- that is, an essential component was dishonored -- or whether the breach was immaterial. The aggrieved party may seek to have the contract deemed voidable, which means that the contract will be cancelled. In extreme circumstances, a judge may deem the contract to be void, which has the legal effect of holding that a contract never existed in the first place. Damages may also be sought.

This is only a very general overview of contract formation and breach of contract. In the end, contracts are complex legal creatures. Before entering into a contract, it could be helpful to seek legal guidance to ensure it will be enforceable if challenged in court. And, should you believe the contract has been breached or are facing claims that you breached a contract, an attorney can explain how the law applies to your situation, so you can make informed decisions moving forward.

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Kluttz Reamer

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Kluttz, Reamer, Hayes, Adkins & Carter, L.L.P.
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Salisbury, NC 28144

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