Contract Law

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We prevent and resolve problems related to Michigan and Ohio contract issues. Creating a good and viable contract between parties is of paramount importance. There is an old adage in business: “pay now or pay later.” This is never more true than when it comes to generating a contract. A written contract is most often the foundation for all business relationships.

The elements that must be established to demonstrate the formation of a legally binding contract are (1) offer; (2) acceptance; (3) consideration; (4) mutuality of obligation; (5) competency and capacity; and, in most circumstances, (6) a written instrument.

Contract law and legal theory have developed over the centuries and thousands upon thousands of cases center around the six elements listed above. The contract attorney’s job is to create contractual provisions that protect their client’s interests not only for when business relationships are good between parties, but more importantly, if and when these relationships deteriorate.

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Soble Podcast Episode: Hired the Wrong Person

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Top Contract Questions

Contract law has evolved over the centuries. It is often complicated, filled with subtule legal nuances that can, and will impact the legal outcome of one’s case. Make sure that you have the right representation when negotiating a contract or tackling a contract dispute. Call us today to learn more about your rights!

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In Michigan, what happens when parties to a contract allege that the other party breached the contract terms?

To establish a breach of contract, one must prove “(1) there was a contract, (2) the other party breached the contract, and (3) the breach resulted in damages to the party claiming breach.” Bank of America, NA v First American Title Ins Co, 499 Mich 74, 100; 878 NW2d 816 (2016). The salient element is the second, when both parties alleging that the other breached the contract. “The rule in Michigan is that one who first breaches a contract cannot maintain an action against the other contracting party for his subsequent breach of failure to perform.” Michaels v Amway Corp, 206 Mich App 644, 650; 522 NW2d 703 (1994). “However, that rule only applies when the initial breach is substantial.” Id (emphasis added). “In determining whether a breach is material, the court should consider whether the non-breaching party obtained the benefit it reasonably expected to receive.” Omnicom of Mich v Giannetti Inv Co, 221 Mich App 341, 348; 561 NW2d 138 (1997).

Do all contracts have to be in writing to be enforeable?

No, a contract can be legally enforceable whether it is made in writing or it is an oral agreement. There are some exceptions however. Under the Statute of Frauds, certain agreements are not enforceable if they are not in writing. For example, agreements related to real estate that have a term exceeding one year must be in writing to be valid. Check with our attorneys to learn more about these exceptions.

What if I signed an agreement on behalf of a small company that I own. Am I also personally responsible for the company if it defaults?

Whether or not you will be held personally responsible under a contract will depend on the provisions in the contract. If you signed as a ‘personal guarantor’ for the company, you will be held accountable for the company’s obligations, but to what extent will depend upon how you negotiated your guaranty.

I never signed an agreement, but now I am being sued. Can I be held liable?

Even if you feel that you did not enter into an agreement, a court may find that you are bound by a contract pursuant to the legal doctrine of “promissory estoppel.” The court will determine if (1) a legal relationship either exists or is anticipated between the parties; (2) representations are given in circumstances that lead the other party to assume the promise will be performed; (3) reliance by the other party on the promise or representation to their own detriment; and (4) it would be unconscionable for the promisor to go back on their promise.

Can I collect punitive damages for a seller's breach of a business agreement?

Unless the conduct of the other party was so outrageous, reckless, or malicious, it is highly unlikely that a court would award punitive or exemplary damages in a contract case. Compensatory damages are awarded instead. Courts most often award compensatory damages covering the actual loss the nonbreaching party incurred as a result of the breach of contract. Compensatory damages replace the loss caused by the breach.

What does an anticipatory breach mean?

An anticipatory breach occurs when a party demonstrates its intention to break a contract. However, vocal or written confirmation is not required, and failure to perform any obligation in a timely matter can result in a breach. An anticipatory breach ends the counterparty’s responsibility to perform its duties, however, the aggreived party claiming an anticipatory breach is legally obligated o make every effort to mitigate their own damages if they wish to seek damages in court.

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