Breach of Contract Disputes
It's easy to accuse another of "breach of contract" in Pennsylvania. But there exist technical elements needed to make any agreement enforceable. Certain defenses exist to both oral and written contracts. And what about proving damages? How much money will a court award? To understand, you've come to the right place! The press recognizes Mr. Elliott as an expert in contract law. Duquesne Law school invites Mr. Elliott to speak to students each year about contract litigation.
If you seek to enforce an agreement, or you've been sued for violating one, the case can be difficult to bring or defend. Your success will depend on two things: one, a solid review of the contract; and two, the expertise of your attorney.
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Our 7 lawyer firm handles breach of contract disputes throughout Western Pennsylvania. Call or email 412.342.0992.
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Frequently Asked Questions
What Breach of Contract Disputes Do You Litigate?
On the plaintiff and defense side, we handle all kinds of contract disputes, including:
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- Bad Faith Insurance Practices (for more)
- "Board of Claims" matters, where the contract is with the Commonwealth (fore more)
- Construction and Renovation of Property (for more)
- Commercial litigation (for more)
- Consumer Protection Law (for more)
- Credit Card Debt Disputes (for more)
- Home Inspection Contracts (for more)
- Non-compete clauses (for more)
- Nondisclosure Agreements or NDAs (for more)
- Trade secret clauses (for more)
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How Much Do You Charge?
For a flat fee of only $200, you can have an attorney speak with you for up to an hour about any contract claim or defense. During that time, we will evaluate the matter and discuss the most effective, efficient, and cost-effective litigation plan.
How Do I Prove "Breach of Contract" in Pennsylvania?
A claim for breach of contract in Pennsylvania requires (1) the existence of an enforceable contract, (2) the occurrence of a material (versus minor) breach, (3) causation of some harm, and (4) proof of actual damages. See Gen. State Auth. v. Coleman Cable & Wire Co., 27 Pa.Cmwlth. 385, 365 A.2d 1347, 1349 (1976). While not every term of a contract must be stated in complete detail, every element must be specifically pleaded. See Snaith v. Snaith, 282 Pa.Super. 450, 422 A.2d 1379, 1382 (1980)," See CoreStates, NA v. Cutillo, 723 A.2d 1053 (Pa. Super. Ct. 1999).
What's Needed for a Binding Contract in PA?
Pennsylvania's Superior Court has opined: "[b]efore a contract can be found, all of the essential elements of the contract must exist. Therefore, in determining whether an agreement is enforceable, we must examine whether both parties have manifested an intent to be bound by the terms of the agreement, whether the terms are sufficiently definite, and whether consideration existed." CoreStates, NA v. Cutillo, 723 A.2d 1053 (Pa. Super. Ct. 1999).
If all three of these elements exist, the agreement shall be considered valid and binding. Burkett v. Allstate Insurance Co., 368 Pa.Super. 600, 534 A.2d 819 (1987), vacated on other grounds, 520 Pa. 94, 552 A.2d 1036 (1988)," see Johnston the Florist v. TEDCO CONST., 657 A.2d 511, 441 Pa. Superior Ct. 281, 441 Pa. Super. 281 (Super. Ct. 1995). To learn more about how an "offer" can be accepted, or what constitutes sufficient "consideration," click here.
Is an Oral Contract Enforceable in PA?
For the vast majority of agreements in Pennsylvania, there is no requirement for a "writing." However, a few exceptions exist. These are:
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- contracts for the sale of goods over $500,
- real estate leases greater than three years,
- the sale of interests in property, and
- contracts for home improvement pursuant to Pennsylvania's Home Improvement and Consumer Protection Law. Click here to learn more about what constitutes true "home improvement" or call a Pittsburgh attorney in our group.
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What About a Partly-Written, Partly Oral Contract?
What if the agreement is partly oral, partly written? If the written part is "fully integrated," then you cannot look beyond it. For example, if the contract reads: "there are no other understandings between the parties," the court cannot look beyond the four corners of the written agreement. This is the "parol evidence" rule. Parol simply means "outside." So the rule is, the court may not look outside of a fully integrated contract.
What's the Statute of Limitations For Breach of Contract in PA?
Four years. This is according to Title 42, § 5525 from our legislature in Pennsylvania. This applies to both written and oral contracts. However, Pennsylvania has one very odd -- and narrow -- exception, where the statute of limitations is twenty years! Harkening back to merry ol' England, an instrument "under seal" (stamped in wax) afforded a party to said agreement a full twenty years to enforce it, including such documents as a mortgage. Pennsylvania is one of only a few states, such as Georgia, which still follows this antiquated rule:
It is well-established that, although a vestige of the past, the contract under seal may still operate to lengthen the statute of limitation. ... [T]his court has held, in accord with many cases written by our Supreme Court, that when a party signs a contract which contains a pre-printed word "SEAL," that party has presumptively signed a contract under seal. Klein v. Reid, 282 Pa.Super. 332, 422 A.2d 1143 (1980).
When Does The 4 Year Statute Start to Run?
The four year statute of limitations for breach of contract in Pennsylvania does not begin to run until the aggrieved party has reason to believe he's been harmed by the breach. In other words, the statute of limitations is "tolled" (or extended) until the injured party -- using due diligence -- first learns of the harm. Citing to Pocono International Raceway, Inc. v. Pocono Produce, Inc., 503 Pa. 80, 84, 468 A.2d 468, 471 (1983),, Pennsylvania's Supreme Court has opined:
"Pursuant to application of the discovery rule, the point at which the complaining party should reasonably be aware that he has suffered an injury is a factual issue "best determined by the collective judgment, wisdom and experience of jurors." White v. Owens-Corning Fiberglas Corp., 447 Pa.Super. 5, 22, 668 A.2d 136, 144 (1995) (quoting Petri v. Smith, 307 Pa.Super. 261, 271-72, 453 A.2d 342, 347 (1982)., appeal denied, White v. Owen-Corning, 546 Pa. 648, 683 A.2d 885 (1996).
What Type of Recovery Can I Get For Breach of an Agreement?
The party seeking to enforce a contract can claim damages for the failure to perform, but not emotional distress, punitive damages or "penalties." Above, all courts strive to put the non-breaching party in the position she would have enjoyed, had the contract been followed, i.e, give each party the benefit of his or her bargain.
Benefit of One's Bargain
The purpose of contract law is to give each party "the benefit of their bargain." In other words, you're entitled to the benefit you would have received, had the contract been carried out as intended. So for example, if you agreed to pay a contractor to update and replace your bathroom, for $15,000, that's all it should cost to have the work done correctly.
Or, for example, let's say you have a contract to purchase a new car from Dealer #1. The purchase price is $50,000, which is $5,000 below the sticker price of $55,000, only, Dealer #1 sells the car -- the last one its kind at that dealership -- to someone else. So, you shop around; the best price you can find is $55,000 from another dealer. Thus, the benefit of your bargain with Dealer #1 was $5,000, which is the amount you may seek from Dealer #1.
Consequential Damages
If the contractor either doesn't finish the job, or finishes the job but causes damages (called "consequential damage"), you're entitled to the difference between $15,000 and the extra costs you incurred to finish the job plus the cost fix any damages caused by the contractor to your property.
No "Pain and Suffering"
No matter how aggravating it might be to enforce a claim for breach of contract, it's not like a "tort" claim for "negligence" claim, for a car accident, for example. In fact, there can be no claim for "pain and suffering," if the "gist" of one's action is for breach of contract. Click here for more.
The Defenses to Breach of Contract in Pennsylvania?
Assuming the plaintiff can prove a valid contract and actual, resulting damage, the burden shifts to the Defendant. There exist numerous "affirmative defenses." These include:
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- the statute of limitations (showing the Plaintiff knew that the breach had occurred over for years ago),
- an accord and satisfaction (new agreement showing the parties resolved their dispute),
- the contract is against public policy (involving something illegal, such as the sale of drugs, prostitution, or other activity against the public policy of Pennsylvania,
- impossibility or impracticality (proving that new circumstances arose, making it impossible or impractical for the defendant to have performed),
- fraud in the inducement of the contract (falsely representing the facts to induce the opposing party to agree), or
- failure to attach the written contract (if one exists) to the lawsuit. Click here for more.
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In What State/County Can I File Suit?
Here, it's very important to read your contract because the agreement itself can limit suit to only one particular venue or jurisdiction, even it it would be grossly unfair to the other party.
So, for example, if you live in Pittsburgh -- but you entered into a contract with a New York Company, which drafted the contract, providing all suits must be brought in New York City. This is called a "forum selection clause" or "choice of forum clause." You ignore it, and file suit in Allegheny County (Pittsburgh). But by doing so, you could be the one in breach of the agreement. As a result, you could also be forced to pay the opposing party's attorney fees, depending on the contract's wording. Thus, in this example, you may need to retain local counsel in the state where your contract requires suit to be filed.
Can I Recover My Attorney Fees in PA For a Breach?
In Pennsylvania, a party suing for breach of contract generally cannot get an award to cover his attorney fees. The general rule in Pennsylvania is that each side pays his own attorney fees. However, two exceptions exist.
1. Attorneys Fee Clause
If the contract expressly allows it, one party to recover his attorney fees in a dispute related to the agreement.
2. Consumer Protection Law Or Other Statute
The other exception is where the parties' dealings are covered by consumer protection law or another statute expressly providing for a recovery for attorney fees. For example, Pennsylvania's Home Improvement and Consumer Protection Act (click here) or the Unfair Trade Practices and Consumer Protection Law. Note, however, that neither of these statutes pertain to commercial transactions, such as purchases primarily for your business or commercial gain.
Can I Get Punitive Damages For a Breach in PA?
The answer is no. In civil cases, our appellate courts note that a claim for breach of contract is to simply give a person the benefit of his bargain. “Punishment is inconsistent with traditional contract theories,” DiGregorio v. Keystone Health Plan East, 840 A. 2d 361 (Pa.Super. 2003), citing to Johnson v. Hyundai Motor America, 698 A.2d 631, 639 (Pa.Super.1997), which held:
[I]n contract actions, damages are awarded to compensate an injured party for the loss suffered due to the breach, the purpose of punitive damages is to punish outrageous and egregious conduct done in a reckless disregard of another's rights; it serves a deterrence as well as a punishment function. Johnson, Id. at 639.
Even in the criminal courts, Pennsylvania has purported to have done away with "debtor's prison," per 42 Pa. C.S. § 5108. Thus, we have a policy in PA against "punishment" for non-payment of debts. Thus, a clause in contract for a "penalty" -- sounding punitive -- should not be enforceable, unless the amount is a reasonable approximation of damages to the non-breaching party. So a "penalty fee" of $50 -- for you being ten minutes late on your rent payment -- is not likely a fair approximation of the "harm" resulting from your breach.
What About Violation of Consumer Protection Law? Punitive Damages?
Yes. The penalty for violating Pennsylvania's Home Improvement and Consumer Protection Law or the Unfair Trade Practices and Consumer Protection Law is treble (or triple) damages plus attorney fees.
Can I Sue For Breach of Contract in Small Claims Court?
You can sue someone in small claims court if they broke a contract. But the judge can only give you up to $12,000. If your case involves getting triple damages or getting the other person to pay your lawyer fees, you might want to file in a different court instead of small claims court.
Can a Court Re-Write a Contract To Make It "Fair"?
Contracts are usually not changed by the court to make them "fair." But there is one big exception: when someone asks the court to compel someone else to do something, like following a noncompete agreement, NDA, or refrain from sharing a trade secret. In these cases, the court can decide the contract is not fair and change it.
Otherwise, the court will not change a contract to give someone a better deal than what they agreed to. The court wants to let people make their own deals and keep the economy working.
What is the Effect of Consumer Protection Laws on Contract Law?
The law can protect you from a bad deal in certain limited instances. For example, in Pennsylvania, the law might allow you to cancel certain parts of a contract or the entire deal. But the law only protects you in certain "consumer" transactions. I.e., agreements you enter into primarily for personal or home use, not commercial use. So if you get a loan from Discover primarily to fix up your home, that's a consumer transaction, even if partly used for business. But a loan purely for your business is not.
Let's Say There's No Valid Contract...
Okay, let's break this down in a simple way:
Imagine your contract has a problem that can't be fixed. Maybe it's missing something important, or it wasn't written down like it should have been.
Now, what can you do?
There are two ways to try to get the money you think you're owed:
1. Unjust enrichment - This is when you did something that helped someone else, but it would be fair for them to keep the benefit without paying you. For example, if you accidentally built a shed on your neighbor's property, that might have made them "richer," even though it wasn't supposed to be there.
2. Promissory estoppel - This is when you relied on someone's promise, and it ended up costing you. For example, if you moved across the country for a job that didn't have a real contract, you could say you relied on their promise, and that was their fault that you incurred moving expenses that were otherwise unnecessary or beneficial to you.
The key is that you didn't have a proper contract, but you still think you should get paid. These two ideas can help you try to get the money you think you're owed.
What About a Jury Trial?
There is no absolute right to have a jury trial for a breach of contract claim in Pennsylvania. The U.S. and Pennsylvania constitutions do not give people this right. For example, if you are suing the state of Pennsylvania for breach of contract, the case will go to a special "Board of Claims," not a jury. However, in most cases, you can have a jury trial if you are seeking money damages (not asking the court to make someone do something) for a breach of contract, as long as you request it on time and don't give up that right.
You can give up the right to a jury trial by agreeing to something like arbitration in the contract. This means you agree to have a neutral person or group decide the dispute instead of a jury.
But recently, a court in Pennsylvania said that Uber's arbitration clause was not valid. Click here for more.
If you have a contract dispute, you should talk to a lawyer about the best way to handle it.
Let's Get Started!
Contact a Pittsburgh Lawyer today about any agreement dispute!
412.342.0992
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