What is Breach of Contract in Nevada
The Nevada Uniform Commercial Code governs various business transactions and dealings between private parties. Section 2 of the Nevada Uniform Commercial Code lays out specific – yet broad – definitions of a wide range of terms to be considered in a commercial deal. For example, to be considered a "contract," an agreement must merely be "the total legal obligation that results from the parties’ agreement." While that definition is clear, it is open to a wide range of interpretation, and this is where Nevada lawyers experienced with handling these types of cases are invaluable.
In addition to the definition of contract, Article 2 of the Nevada Uniform Commercial Code includes a definition of "breach of contract," and details the very specific remedies a non-breaching party may be entitled to under certain circumstances . To begin, Nevada law is clear, and it allows courts discretion in determining whether a specific act constitutes "a breach of contract." A "breach of contract" is defined as "the failure without legal excuse to perform any promise that forms the whole or part of a contract."
Another part of the same Nevada statute provides five common remedies a party may be awarded if a breach of contract is found: "Performance by any party; any or all other remedies available at law or in equity; an action for damages for total breach of the agreement; an action on the contract; or receipt of the benefit of the bargain, which is the difference between the value of the promised and the actual performance," is defined as "the non-breaching parties’ remedy." The non-breaching party is not, however, "entitled to consequential or special damages," even if the breach resulted in consequential or special damages.
Types of Breach of Contract
Breach of contract cases can vary substantially from each other. While the general definitions of what constitutes a breach as well as the types of remedies available are generally the same, the unique circumstances and interests of each party involved will often dictate the type of breach that will be alleged and whether the court will find in favor of one party or the other. The four types of breaches are:
Minor Breach: A minor breach is one that deprives the innocent party of only a small benefit, and does not impair the overall value of the contract. An example is when a contractor is asked to build a fence and leaves off a gate, but the overall purpose of the fence is still met. Minor breaches may entitle the injured party to receive a portion of the damages suffered and may have no effect on the injured party’s continuing obligations under the contract.
Material Breach: A material breach is one that results in the breaching party failing to fulfill the contract’s principal purpose. An example is when a contractor is asked to build a fence and erects a fence that is too short or too low to provide any real value. A material breach is serious enough that it gives the aggrieved party the right to terminate the contract. In most situations, the injured party will not be obligated to continue performing under the contract. A material breach will often justify the aggrieved party suing for all damages suffered, including loss of expected profits.
Anticipatory Breach: An anticipatory breach occurs when one contracting party signals an intent to breach the contract before it becomes due. A party can breach a contract even if the time for full contract performance has not yet arrived. Material breach may occur even though the contract has not yet been performed if a party unequivocally communicates an intent not to perform the contract prior to the date upon which performance is due. In this situation, the aggrieved party has the absolute right to sue for breach, even if all the terms of the contract have not yet been violated.
Actual Breach: An actual breach occurs when one side to the contract fails to provide the promised performance as provided by the contract terms, or provides a substitute performance which is inferior to the performance promised in the contract.
Remedies for Breach of Contract
The broad characteristic of a remedy for a breach of contract is that a successful aggrieved party is generally entitled to recover damages for any losses suffered from the breach. Factors such as the type and terms of the contract, foreseeability of damages, whether the aggrieved party was able to perform its obligations before the breach, and the culpability of the breaching party will all factor into the damage award.
Breach of Contract Remedies
When a breach of contract occurs, the wounded party will first seek legal counsel to determine what remedies are available under the law and what is most likely to succeed with the particular set of circumstances before the Court. A breach of contract action would most commonly be filed in Nevada state court, since a breach does not invoke an area of Federal law. The injured party/breaching party would generally be seeking enforcement of the contract, or an award of money damages as a result of the breach.
In challenging contract disputes, there are several possible legal remedies that may be available to one of the injured parties. These are: (i) monetary damages, (ii) specific performance; and (iii) cancellation and restitution. The specific requirements for each type of recovery shall be discussed in turn below. Monetary damages for breach of contract is usually a monetary award to compensate the injured party for the harm that was actually caused by the breach. In general, damages have to be out of pocket losses suffered by the plaintiff as a result of his/her reliance on the contract. The harm must be one that was reasonably foreseeable at the time of entering into the contract. In addition, the exact amount of money awarded as damages must be demonstrated with reasonable certainty, not based on speculation or conjecture. Therefore, a plaintiff can recover the following damages: • Expectation damages – the plaintiff is restored to the position he/she/it expected to be in if the contract was successfully adhered to;• Reliance damages – restores the plaintiff to the position he/she/it occupied prior to the tortious conduct. Also includes the return of any money that was paid to the defendant (i.e. deposits); and • Consequential damages – these damages are those that flow logically and necessarily from the contract itself. In other words, these are damages that are the foreseeable result of a breach and were caused directly by the breach of contract. Finally, consequential damages will also need to be proven with reasonable certainty. The Plaintiff has the burden of proving the actual damages suffered as a result of the breach. Actual loss is that amount of money that would restore a party, in whole or in part, to the economic position objectively sought and reasonably in the contemplation of the parties at the time the contract was formed. The purpose of the damage award is to compensate the non-breaching party in such a way as to place them in the same position they would have been in had the contract been followed and performed. Conversely, a non-breaching party is not entitled to be compensated for both lost profits and a full recovery expenditure. Specific perform is a remedy available to a party who has no adequate remedy at law and where the contract is one of unique subject matter, thus calling for the exercise of sound judicial discretion. Generally speaking, specific performance requires a breaching party to fulfill the obligations contained in the contract. Specific performance will be granted at the court’s discretion to prevent an injustice or an unjust enrichment of the breaching party. It must be noted however, that in a contract dispute over land, a court will almost always order the specific performance of the contract.
Cancellation and restitution is also a remedy available in a breach of contract case. A cancellation and restitution will allow an injured party to avoid having to perform under the contract where he/she/it was induced to enter into the contract through false representations of the other party. The injured party may either elect as a remedy, to avoid his contractual duties, or enforce them in their entirety.
Contract Statute of Limitations in Nevada
Breach of contract claims in Nevada are subject to two different statutes of limitations depending on the relief sought. All relief requested for a breach of contract claim is controlled by NRS 11.190(1) or NRS 11.190(2). If the revindication (relief) requested is based on an implied or express contract, the applicable statute of limitations is Nevada Revised Statutes (NRS) 11.190(1). If the breach of contract claim is based on a written contract, the applicable statute of limitations is NRS 11.190(2). Otherwise, the applicable limitation period is three (3) years on all breach of contract claims, regardless of what type of relief is requested.
Claims that accrued (arose) on or after October 1, 1997 through September 30, 2017 are limited to six (6) years from the date of accrual. Claims that arose on or after October 1, 2017 are limited to 8 (8) years from the date of accrual. Claims that accrued prior to October 1, 1997 are subject to a four (4)-year statute of limitations, unless the breach of contract claim is on a written contract, in which case it is limited to six (6) years.
In general, a claim accrues (arise) when the plaintiff knew or reasonably should have known of the facts giving rise to the claim. It is the plaintiff’s knowledge of the facts giving rise to the claim, not the legal consequences (not the awareness of the legal viability of the claim) that controls the accrual date.
Establishing Breach of Contract in Nevada
Nevada law places the burden of proof on the plaintiff in a breach of contract suit. This means that you, as the plaintiff, must provide enough evidence to convince the judge, or the jury if it is a jury trial, that a breach of contract has occurred. For a breach of contract claim, which is a legal claim, you must prove four specific elements:
These elements are rarely satisfied in the absence of written contract terms. For instance, how will a judge know whether you did not meet your contractual obligations for failure to pay a debt if you do not have a record of the contract terms? For this reason, we strongly recommend that you put all agreements in writing so that you can more easily prove your case if a dispute arises .
If you are working with an attorney on your case, he or she will gather the evidence needed to prove each element. If you are representing yourself, it will be your job to put together the evidence needed to prove each element.
A number of documents may be useful to support a breach of contract case. In addition to the contract terms themselves, you will generally want to include any change orders, invoices, receipts, email communication about the job, text messages, and photographs related to the job.
How to Avoid a Breach of Contract Dispute
Preventing breach of contract disputes is the best way to save yourself the time and expense of litigation. While sometimes breaches happen regardless of how many precautions you take, there are a few things you can which might minimize the risk of a breach occurring.
Ensure that the terms of the contract are clear. If there are no gray areas left to interpretation, the chances of a party failing to meet its obligations under the contract are slim. For this reason, it is always a good idea to hire legal counsel to draft or review your contracts so that you can be confident that they are watertight.
Regularly follow up with the other party to obtain updates on how things are going. Good communication is key in any relationship, including contractual relationships.
If your matter is particularly high-value, you may want to consider involving your legal counsel proactively. It may be necessary for your attorney to contact the other party on your behalf, or to directly intervene in matters if you are concerned about the possibility of a breach of contract.
Finding a Las Vegas Contract Attorney
Upon learning that your breach of contract claim requires the assistance of legal counsel you may not know where to turn. These tips should help you focus your efforts on obtaining the right assistance to create a successful contract resolution strategy. The following are some ideas to begin the process of finding a local or Las Vegas, Nevada breach of contract attorney: – Choosing "A" lawyer for your breach of contract or business dispute needs does not always mean selecting "THE" best lawyer for your matter. Rather, it is about choosing a lawyer who fits your needs and will resolve your matter in a cost effective manner. Your matter should utilize an attorney that is experienced enough to handle your case, but does not unnecessarily over-lawyer your contract dispute. – A knowledgeable and effective litigation lawyer may not be a good settlement lawyer and vice versa. A contract litigation matter does not mean an immediate need for a thorough assessment of all of the opposing party’s assets and claims, especially if the damages are small as discussed previously. – Most personal injury attorneys will never file a lawsuit for their clients, this does not make them bad lawyers, it simply means they have a different focus. In Nevada, most contract litigation attorneys have had plenty of exposure to Court, but only a fraction of their cases actually end up in Court. That said, if you have a contract dispute which requires litigation work , you need an attorney who enjoys the thrill of trial and has taken an appropriate number of cases to trial. – Choose an attorney who is reasonable and who will strive to do the greatest amount of work possible for the least amount of money. Many attorneys will tell you what you want to hear. It is important to find someone who will tell you the truth (and based on your lawyer’s experience) about the best options available to you. – Your attorney’s fees may exceed the value of your claim, but sometimes that is your only option for compensation. Choosing the path of least resistance may or may not lead to the result you want, but at least you will have proper informed consent about the litigatory path you are walking. – Gender equality and anti-racism are important, however, if you are suing someone for breach of contract you do not want the hiring goal to be working with women, minorities, etc. because that is typically not what it takes to win the case (with some exceptions of course). While equity based hiring is a good thing, risk taking in hiring a qualified attorney and firm is your best bet to successful recovery. – Don’t hire a firm that tries to land you and then send you off to a cheap associate for lower rates. In other words, you should get what you pay for. If an attorney is working for $127 or even $250 per hour, that is a discount attorney in today’s numbers. Attorneys are business professionals by training and need to charge a reasonable rate to make a living. Your contract claim may or may not be worth the risk of hiring a discount attorney. – Don’t try to handle a breach of contract matter yourself (e.g. pro se) unless you have time to waste. Even if you think you have the contract dispute handled and you are highly educated, hiring a local contract attorney is the best way to go.