Tag Archives: language

Contracts

Contracts: Reading, Understanding & Breach

You have often heard that you should read a contract before you sign it. While this is true, the better advice is to make sure you understand the contract before you sign it. Many attorneys love to use fanciful legal jargon that can make it difficult to fully understand the terms and conditions in the contract. As a result, a breach of contract action is often the result of inadvertent failures because the party either failed to read or understand its obligations.

Breach of Contract

The most common type of breach of contract disputes is one that looks back at past actions or inactions. For example, a party failed to perform a duty required by the contract or the party took an action that is prohibited by the agreement. It is important to note that either action or inaction may be the basis of a breach of the contract lawsuit.

It is also possible for a breach to be forward-looking. This is often referred to as an “anticipatory breach” and it occurs when one of the parties either states its intention not to perform, or more frequently, does something to indicate that it will not perform its contractual obligations in the future. Although the time for performance has not arrived, the expression of the party’s intent not to perform can be sufficient to constitute a present breach of contract.

Responding to a Breach

If you are the non-breaching party, you should immediately consider how to minimize your damages. This is crucial because all parties to a contract have the duty to mitigate damages. In other words, you can’t sit back and let your damages mount if there are steps you can reasonably take to lessen them.

Before you suspend your own performance under the contract in response to the other party’s breach, you should have a knowledgeable business attorney review the agreement. It is important to determine whether the other party’s breach is a material or non-material breach. You should also gather and maintain all documentation and other evidence that the breach of contract occurred and your damages suffered as a result.

Litigating Breach of Contract Claims

Lawsuits can often be avoided with open communication. When a breach first occurs, having a clear discussion with the other party will often lead to you finding a way to cure the breach and move forward – saving everyone time and money.

If the dispute cannot be resolved, you will want to review the contract to determine if it has a dispute resolution clause which determines how the dispute will be resolved. You will also want to confer with your attorney regarding any clauses that govern what damages are recoverable in the event of a breach.

If you are entering into a contract and you need assistance understanding what the terms and conditions of the agreement actually mean, call Leslie S. Marell to schedule an initial consultation. She has been practicing business and commercial law for over 25 years. Leslie is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.

Contracts

“Notwithstanding” = Exceptions to What I Just Said (Can’t we just say what we mean?)

If you have read a contract that is filled with fanciful legal jargon, you were probably left wondering what it all meant. One of the favorite terms used by many attorneys when drafting contracts is “notwithstanding.” This one word can create significant confusion because it is used to create exceptions to the rules set forth in the contract.

Typically, the contract contains a provision that sets forth the requirements to be met in order to comply with the agreement. In the next section of the contract, the word “notwithstanding” is used to say “despite what was just detailed above, these are the exceptions to the rules.”

Below are a few of the cons related to using “notwithstanding” in your agreements:

  • Confusion. Many people do not realize that the provisions following the word “notwithstanding” are actually exceptions. It can be confusing and create misunderstandings that result in breaches of contract and disputes between the parties.
  • Subordination of the rules. By using “notwithstanding” and outlining exceptions to the rules, it subordinates the rules. In other words, because the exceptions trump the rules, it tends to place more importance on the exceptions.
  • The foregoing. “Notwithstanding” is often paired with “the foregoing” two state “notwithstanding the foregoing…..” which means despite “x” and “y,” “z” can still occur. This can create significant confusion because these items can overlap and it is not clear how far-reaching or how far back the “foregoing” reaches. The result is that it can impact unintended provisions in the contract.

While the concept behind using “notwithstanding” may be valid, there are simpler and clearer ways of saying it. It is important to avoid ambiguity in your contracts in order to prevent disputes and litigation.

If you have questions regarding business law matters, contact us today to schedule an initial consultation. Leslie S. Marell has been practicing business and commercial law for over 25 years. She is established in private practice and has extensive legal experience counseling companies in the areas of business contracts and transactions, purchasing, sales, marketing, computer and technology law, employment law and day to day legal matters. Let us provide your company the advice and guidance you need.