Breach of Contract & Fraud

Pleasanton business lawyer James G. Schwartz has over 35 years of experience handling disputes on behalf of his business clients in Alameda County and beyond. One of the most common problems businesses face is how to deal with an individual or business that fails to live up to his or her end of a bargain, either through breach of contract or fraud. This other party’s failure to perform may have an impact on your business and your goals. If it does, we can help you resolve this issue either through alternative dispute resolution or trial.

Breach of Contract

Contract disputes are usually cases in which there is a binding agreement with terms that one or both parties failed to perform. While some disputes related to a contract can be resolved through negotiation with the other party, many cannot. In those cases, an experienced business and civil litigation attorney can file a breach of contract lawsuit on your behalf.

The first issue for the court to resolve is whether there is a binding agreement. Not all agreements are binding. For an agreement to be an enforceable contract there must be: (1) an offer, (2) an acceptance, (3) a bargained-for exchange of promises in which some of value is given in order to obtain the promise, and (4) sufficiently definite terms.

Assuming there is a valid contract, the court next looks at whether there was a breach that caused actual damages. Assuming a breach is found, the court must consider any defenses raised in response to a claim of failure to perform under the contract.

There are a number of circumstances recognized as valid defenses by law. For example, courts generally do not enforce contracts with minors or with a person under legal guardianship. Laws also protect certain groups who are bargaining from unequal positions of power, and deem void terms that are considered inherently unfair or against public policy.

A court that finds a valid defense may void the contract. In those cases, it may allow one of the parties to cancel or revoke the contract or it may declare the contract void. On the other hand, if there are no valid defenses, a court will award monetary damages to compensate the injured party. Usually specific performance is not compelled. Instead, the injured party must prove his monetary damages in order to be put into the position he would have been in had the breaching party timely and properly performed.

Fraud

In a simple contract case, both parties may have had honest intentions to perform in a particular way. However, there are also contract cases involving deceptive or dishonest conduct, or fraud. There are multiple species of fraud, but one of the most common in business contexts is actual fraud (California Civil Code section 1572). Actual fraud occurs when one party to a contract performs one of the following acts with the intent to deceive and persuade another party to enter the contract, and where the other party does enter into the contract and is damaged. The acts include:

  1. a suggestion as fact of something untrue, by someone who doesn’t believe it is true;
  2. a positive untrue assertion, which the person who is asserting unreasonably believes to be true;
  3. the suppression of a true thing, by one having knowledge of the truth; 
  4. a promise made without the intention of performing it; and 
  5. any other act generated to deceive.

Some business cases may warrant bringing a cause of action for the tort of fraud—a type of fraud that is not based on a contract. This is significant because in California, punitive damages may not be awarded in breach of contract cases, but can be requested in tort cases. A knowledgeable and experienced Pleasanton business attorney can assess the facts of your case to determine what theories it is appropriate to sue under and how a court is likely to respond to your case. Contact us in our Alameda County office at (925) 463-1073 or via our online form for a free initial consultation.

Contact us for your Free Initial Consultation