When Do Contracts Need to Go to Litigation?
Contracts are essential for any transaction because they establish the terms and conditions of an agreement. Without a written agreement, providing the terms and conditions of a deal may be challenging if a dispute arises. Unfortunately, even when there is a written contract, there may be a dispute over the terms and performance of the contract. When these disputes occur, litigating to resolve the issue may be necessary.
Why Do Contracts Go To Litigation?
You may take litigate your contract for validity or enforcement for several reasons, including:
- Breach of contract: When a party fails to fulfill its obligations under the agreement, it is a breach of contract. Breaches of contract can lead to litigation where you seek compensation or specific performance. However, courts are typically more likely to reward compensation to the non-breaching party than specific performance.
- Dispute over terms: When there is a disagreement over the meaning of a term, it can lead to contract litigation. When resolving a dispute over term interpretation, the court will usually consider the party’s reasonable expectation when they entered the contract. However, in some cases, the court may consider evidence such as a course of dealing and prior agreements or negotiations to determine the term’s meaning.
- Misrepresentation: When a party makes a false statement about a material fact, it makes the agreement voidable. This means that the aggrieved party can void the contract if they choose, or they can leave it in full force. Additionally, if the comments induced you to enter the deal, it can lead to contract litigation for losses from misrepresentation.
- Fraud: When a party intentionally makes a false statement or conceals material facts to deceive you, it is fraud. This can lead to contract litigation to compensate you for your losses resulting from the fraud.
- Mistake: Like when misrepresentation occurs, a contract becomes voidable if there is a mistake of fact. When there is a mistake considering a material fact, it can lead to litigation.
- Duress: When someone coerces you into entering an agreement through a threat of harm, it is duress. If you entered an agreement under duress, you could litigate the contract to make it void and unenforceable.
- Undue influence: If one party uses its power or authority over you to influence the terms of the agreement, or your decision to enter the agreement, it is undue influence. Undue influence makes a contract voidable and can result in litigation to make the contract unenforceable.
- Impossibility: Sometimes, unforeseen situations arise that make it impossible to perform under the terms of the contract. If you cannot agree on resolving the issues arising because of the unexpected event, it may lead to litigation.
- Impracticability: When performing your obligations under a contract becomes impractical, it can lead to litigation. Usually, litigation arising from impracticability is resolved by modifying the contract.
- Dispute over performance: When you enter a contract, each party will have obligations under the contract. If one party fails to perform its obligations, it can lead to contract litigation.
Before you litigate your contract, you must consider the potential outcomes. This is because there are no guarantees in litigation, meaning you may not get your desired result of specific performance under the contract. For example, if you enter into an agreement to purchase a home and the other party breaches their agreement, you can buy a different house. It is doubtful that the court will award you the house, even if that’s your desired outcome.
If your contract is heading towards litigation, the experienced contract litigation attorneys of Wagner Zemming Christensen, LLP, are ready to help. Our skills and knowledge can make a substantial difference in your case.
To discuss your options, contact us at (951) 686-4800 for a confidential case evaluation today.