Breach of Contract

SMALL CLAIMS COURT: BREACH OF CONTRACT

Situations for Filing a Claim for Breach of Contract in Small Claims Court

All of us are, have been or will be bind with different types of contracts: we have to sign a contract to get our credit card; to lease a car; to rent an apartment; to advertise our product or service; to go to gym; to get a job; to buy a computer; to hire a construction team and so on so far. Most of the time, we don’t even realize that fact.

There are an endless number of situations when things go wrong: a fridge we bought yesterday doesn’t work; a printing company issued only 5,000 copies of our corporate brochure instead of 10,000 and insists on the number of 10,000; a web designer of our e-store is 5 months behind schedule. We are frustrated and tired of it and looking for legal help.

Laws exist for the protection of the consumer regardless of whether they are buying goods in a store, obtaining services from a company, or applying for a credit card. All agreements are strictly regulated and there are consequences should these regulations be broken.

Unfortunately, sometimes dishonest people will slip out. For instance, a large retailer that advertises goods on the Internet is inviting the consumer to enter into an agreement to make a purchase. However, the products on websites have been incorrectly priced and the purchase has taken place before the mistake has been noticed. If this happens then there is nothing that could be done.

BREACH OF CONTRACT EXPLANATIONS

Contract

A contract is an exchange of promises between two or more parties to do, or refrain from doing, an act, which the resulting contract enforceable in a court of law. A contract is a promise or set of promises, the breach of which gives a remedy or the performance of which creates a legally recognized obligation. The remedy at law for breach of contract is “damages” or monetary compensation. The remedies award the damaged party the “benefit of the bargain” or expectation damages.

Any oral or written agreement between two or more parties can constitute a binding legal contract. However, only a written contract can be material evidence. If the contract is only oral in nature, it might be difficult to prove the existence of the contract in Small Claims Court.

There are some types of contracts that must be in writing to be enforceable, such as:

  • Sales of real property
  • Promises to pay someone else’s debt
  • A contract that takes longer than one year to complete
  • Property leases for more than one year
  • A contract that will go beyond the lifetime of the one performing the contract
  • The transfer of property upon the death of the party performing the contract

If you don’t have such a contract in writing, the breach of contract will not be enforceable.

Breach of Contract Definition

Breach of contract is a failure of a party to a contract to perform their obligations as agreed to within the contract. Breach of contract is a legal cause of action in which a binding agreement or bargained-for exchange is not honoured by one or more of the parties to the contract by non-performance or interference with the other party’s performance. If the party does not fulfill their contractual promise, or has given information to the other party that they will not perform their duty as mentioned in the contract, there is the “breach of contract” case.

Types of Breach of Contract

A contract may be breached in whole or in part. A breach of contract usually occurs when one or more of the parties:

  • fail to perform as promised;
  • make it impossible for the other party to perform;
  • make it known there is an intention not to perform.

The main types of breach of contract are:

  • Minor
  • Major
  • Material
  • Fundamental
  • Anticipatory

Minor (also, partial or immaterial) Breach of Contract: In a “minor” breach, the non-breaching party cannot sue for specific performance, and can only sue for actual damages. Minor breaches can be, for example, a builder who substitutes his own type of materials for specified materials. The substituted materials may work just as well as the specified but it can still be seen as a minor breach of contract. Suppose a homeowner hires a contractor to install new plumbing and insists that the pipes, which will ultimately be hidden behind the walls, must be red. The contractor instead uses blue pipes that function just as well. Although the contractor breached the literal terms of the contract, the homeowner cannot ask a court to order the contractor to replace the blue pipes with red pipes. The homeowner can only recover the amount of their actual damages. In this instance, this is the difference in value between red pipe and blue pipe. Since the color of a pipe does not affect its function, the difference in value is zero.

Major Breach of Contract: If something particular had been specified in the contract as a condition, a breach of that condition would constitute a “major” breach. For example, when a contract specifies time is of the essence and one party to the contract fails to meet a contractual obligation in a timely fashion, the other party could sue for damages for a major breach.

Material Breach of Contract: A material breach is a breach of contract that has serious consequences on the outcome of the contract. A material breach of contract is any failure to perform that permits the other party to the contract to either compel performance, or collect damages because of the breach. If the contractor in the above example had been instructed to use copper pipes, and instead used iron pipes that would not last as long as the copper pipes would have lasted, the homeowner can recover the cost of actually correcting the breach – taking out the iron pipes and replacing them with copper pipes.

Fundamental Breach of Contract: A fundamental breach of contract is a breach so serious that the contract has to be terminated. In addition that party is entitled to sue for damages.

Anticipatory Breach of Contract: An anticipatory breach of contract is one where one of the parties makes it known that they will not be carrying out agreed work, and the consequences can be termination of the contract and damages being sought in court. An anticipatory breach gives the non-breaching party the option to treat such a breach as immediate and terminate the contract and sue for damages (without waiting for the breach to actually take place).

Overview of Remedies for Breach of Contract

The law provides remedies against those who breach their contracts. The most common and usual remedy for breach of contract will be an award of damages. The general rule for recoverable loss in breach of contract cases is that the courts will award damages to place the aggrieved parties in the same position they would have been in had the contract been performed. In some contracts, the parties may choose to specify a liquidated sum of damages in the event of breach. The caveat here is that the specification of liquidated damages cannot be a penalty. If the liquidated damage clause is enforceable, it will avoid the need for the aggrieved party to prove their actual damages.

BREACH OF CONTRACT PROCEEDINGS IN SMALL CLAIMS COURT

You might want to consider suing for breach of contract in small claims court if the damages you will request for breach of contract are not more than $25,000. More than 50% of the breach of contract cases brought to Small Claims Courts is filed by businesses. Generally, there are two types of Small Claims Court procedures: defended and undefended claims. The number of steps in a Small Claims Court proceedings varies from case to case.

Time Limits

There may be a time limit on how long you can wait before making a claim in Small Claims Court, which is set out in the Limitations Act. Under the law, the time you have to sue may run out. The deadlines vary depending on the circumstances of the case, and the type of case or claim. Check the time limits for your type of case. If you aren’t sure about whether you are still in time to make a claim, talk to CP Paralegal Services.

The following steps will have to be taken for your Breach of Contract case in Small Claims Court:

  • Completing the Plaintiff’s Claim form: you will be required to write in the plaintiff’s claim form a short, clear summary of the events that took place and the reasons you think you are entitled to judgment against the defendant.
  • Deciding which Small Claims Court office to go to
  • Preparing all documents and evidences that can support your case
  • Filing the claim
  • Paying Small Claims Court fees
  • Serving the Plaintiff’s Claim after you have filed the claim with the court: you must prove that the defendant was properly served with the claim. You do this by filing an Affidavit of Service form.

If you have filed a claim and the defendant has not filed a Defence within 20 days, you can ask the court clerk to note the defendant in default. You do this by filing a Request to Clerk form. When a defendant has been noted in default you can ask the court to order them to pay money to you. This can be done by:

  • Asking the court clerk to sign default judgment for a specified sum of money for that you must fill out and file a Default Judgment form; or
  • Asking a judge to order default judgment. To do this, you file a Notice of Motion and Supporting Affidavit form. Explain the facts supporting your motion.

If it is a defended small court procedure, both parties should go for a settlement conference – a meeting with the parties and a judge to try to find an answer to the case that all parties can agree to. It must be held no later than 90 days after the first Defence is filed. There is a special rule for claims that are less than $2,500. The parties can agree to have a judge decide the case at the settlement conference. To agree to this, the parties must fill out a Consent form. The judge would decide the case at the settlement conference only if the parties could not reach a settlement. If the judge decides the case at the settlement conference, the case ends and there is no trial. At the trial each party tells their side of the story and the judge makes a decision.

What You Need to Consider BEFORE making Breach of Contract claim in Small Claims Court

  • Ask yourself if a lawsuit that you are going to start will be worth it.
  • You will need the correct legal name of the person or business and a current residential or business address.
  • Information you need to have to support your Small Claims Court case: You will have to prove your case. Consider what witnesses and/or documents you have to support you: any written evidence or documentation copies of documents (for example, contracts, N.S.F. cheques, record of payments), photographs and other that you intend to use to support your claim must be attached to the Plaintiff’s Claim form
  • Time you have to spend: Can you take days off at work to file your claim, deliver documents, and attend court many times? Are you willing to spend hours and hours for: 1) researching all guides on filing your claim; 2) researching all applicable Small Claims Court procedures and steps; 3) visiting Law Help Ontario at Small Claims Court – Pro Bono Law Ontario Duty Counsel are free lawyers that offer limited services to the public at the Toronto Small Claims Court; or 4) reading legislation on-line, for example the Limitations Act?
  • Consider other options to resolve the issue: To keep your costs low, you might want to try to reach an agreement out of court. This is called settlement. You may consider mediation, which is a less formal method of resolving a dispute through a neutral third party. Mediation can be less time-consuming, more flexible, and less expensive than proceeding in court. It can also help you find your own solution to the dispute and preserve your relationship with the person/business. CP Paralegal Services is always ready to provide you with mediation services
  • Consider having help from CP Paralegal Services: keep in mind, court staff cannot provide you with legal advice or help you to complete all necessary forms. Do not relay on information from relatives and friends, unless they are lawyers or paralegals

How CP Paralegal Services Can Help You with Breach of Contract Case in Small Claims Court

The list of reasons to make a claim for Breach of Contract in Small Claims Court can be endless. Although, you do not need a lawyer or paralegal when you go to Small Claims Court, to have a knowledgeable and experienced party to defend your case is a good idea. Remember, CP Paralegal Services is always ready to help you with your Breach of Contract matter. We think that the information above that we have gathered especially for you, has assured you that dealing with Small Claims Court claim is complicated and often is overwhelming even for professionals.

There are 5 reasons why you may consider asking CP Paralegal Services for assistance:

  1. At CP Paralegal Services, we have experience and knowledge; we know how to deal with your Breach of Contract case in Small Claims Court.
  2. If you hire CP Paralegal Services to represent you in Small Claims Court for your Breach of Contract case, we’ll go to the court office as many times as it necessary, we’ll guide you through the trial, and you will not be involved in a stressful process.
  3. You will not have to ask for a day off at work for filing and serving documents.
  4. CP Paralegal Services will develop the best possible strategy of your defence.
  5. We make sure that all evidences are well-organized for your Breach of Contract case and all time limits are considered.

Do not make a mistake! Save your time, money and nerves!

Let CP Paralegal Services do their job while you are doing yours!

Do not forget that the other party is able to respond to your claim and may give evidence that will affect the judge’s view of your Breach of Contract case. The particular details and proceedings for a Breach of Contract are very technical, tricky and complicated and, more likely, you will need professional assistance.