Simply put, a breach of contract happens when one party does not act in accordance with the terms set out by their contract. Both oral and written contracts can be breached. The parties to breached contracts may attempt to work out their differences on their own, otherwise they will have to resolve their issues in court.

In Maryland, civil courts will have jurisdiction over matters concerning breach of contract. Courts have the power to either invalidate contracts, order parties to take specific actions, or order parties to refrain from taking certain actions. Furthermore, financial awards may be given to non-breaching parties if it is determined that the breach at issue was material and that the nonbreaching party suffered economic damages.

If you need help resolving a breach of contract issue, seek support from our experienced Maryland business advisory attorneys by calling the Heyman Law Firm at (410) 305-9287.

Civil Breach of Contract Cases in Maryland

A contract is breached when one party to a binding agreement does not act according to the terms of their agreement. It is generally not considered a criminal offense unless it involves something like fraud. Breach of contract can happen in both oral and written agreements. Generally, there are two types of breaches that can occur.

A “minor breach” happens when one party does not receive a service or item by a certain deadline. For instance, an electrician may commit a minor breach by stating that they will repair your light fixture by a certain time and actually completing the task a day later.

The other type of breach is a “material breach.” This happens when one party to a contract receives something other than what was stated in their agreement. For instance, a material breach may occur when you order a box of office supplies from a vendor and receive a box of kitchenware instead.

When a breach of contract happens, the parties to the agreement may attempt to resolve their issues on their own. However, if an amicable resolution cannot be reached, they will have to take the matter to court. In Maryland, civil courts will have jurisdiction over cases involving a breach of contract. If it is determined that a breach has occurred, the court can invalidate the contact, force parties to take specific action, or force parties to refrain from taking specific action. Also, if it is determined that the breach was material, then the court may award a judgement to the non-breaching party if they were financially hurt by the other party’s breach.

Damages Available to Plaintiffs in Maryland Civil Breach of Contract Cases

There are multiple types of damages that may be pursued if a material breach of contract occurs. During a free assessment of your potential lawsuit, our Columbia, MD business formation lawyers can explain which of the following damages may be sought:

Compensatory Damages

Compensatory damages are intended to restore the non-breaching party to the contract back to the position where they would have been if the other party held up their end of the deal. In other words, compensatory damages are designed to make the non-breaching party “whole” again.

Generally, there are two forms of compensatory damages that will be considered. “Expectation damages” intend to cover what the non-breaching party expected to gain from their contract. Calculating these damages is typically straightforward and involves evaluating a contract’s terms or analyzing the market values of certain goods and services.

Meanwhile, “consequential damages” are intended to reimburse a non-breaching party for damages outside of what was covered in their contract. For example, a business may suffer diminished profits because an important piece of equipment was not delivered to them. In that case, the business may be compensated for the consequential damages caused by non-delivery of their equipment. In order to these damages to be awarded in your case, the losses at issue must have been either a direct result of the contract breach or reasonably anticipated by both parties when they entered into their agreement.

Punitive Damages

Punitive damages may also be awarded in breach of contract cases. These damages are intended to punish breaching parties for the damage they inflicted and discourage similar conduct in the future. Accordingly, defendants who are ordered to pay punitive damages must not only restore non-breaching parties, but also give them additional monetary damages on top of that. However, these damages are rarely awarded in business contract cases.

Nominal Damages

Nominal damages are usually awarded symbolically and are not worth large amounts of money. They are usually awarded in cases where the plaintiff was not severely affected by the other party’s breach. They are simply awarded to show that the plaintiff was right and that the defendant acted inappropriately.

Liquidation Damages

Finally, liquidation damages are specific damages that are outlined by contracts. They are included in agreements when potential damages from a breach are difficult to anticipate. In order for liquidation damages to be valid, they must be agreed upon by both parties. However, courts may still reject to award liquidation damages that they deem to be excessive. Accordingly, when including liquidation damages in your contract, you must be sure that the amount is reasonable.

Reasons Why Contracts are Breached in Maryland

When it comes to business contracts, there are many different reasons why breaches may occur. The following are only some of the common reasons why contracts are breached in Maryland:

Non-Payment or Late Payment

One frequent cause of contract breaches is non-payment or late payment. This can happen when a party fails to deliver the agreed-upon payment within the specified timeframe. Reasons for non-payment or late payment can range from financial difficulties to deliberate refusal. Breaches of payment obligations can have significant financial consequences for the affected party, leading to potential legal action. If another party breached your business contract by failing to pay or by not paying on time, then our Maryland business advisory attorneys can explain the legal options available to you.

Failure to Perform or Deliver

Another common reason for contract breaches is the failure to perform or deliver as stipulated in specific agreements. This can occur when a party does not fulfill obligations such as delivering goods or services on time and meeting quality standards.

There may be many reasons why a party fails to perform. For instance, a failure to perform may stem from inadequate resources, mismanagement of time, or various other unexpected circumstances.

Misrepresentation or Fraud

Also, a contract breach can occur when one party engages in misrepresentation or fraud during negotiations or execution. Misrepresentation refers to situations where parties negligently or intentionally offer false information that induces others to enter into their contracts.

Fraud, on the other hand, involves deliberate deception with the intent to obtain an unfair advantage in an agreement. Both misrepresentation and fraud undermine the integrity of contracts and may lead to breaches.

Breach of Confidentiality

Contracts often contain clauses that require parties to maintain the confidentiality of sensitive information shared during the course of specific business relationships. Unfortunately, many contracts are breached as the result of breaches in confidentiality.

Breaches of confidentiality can arise because of intentional actions or accidental disclosures. In many cases, these breaches involve disclosures that cause harm to certain parties’ business interests.

Change in Circumstances or Force Majeure

Furthermore, changes in circumstances, including unforeseen events or force majeure (unforeseeable and uncontrollable events), can lead to contract breaches. For instance, “force majeure” events like natural disasters, acts of terrorism, and government actions may make it impossible or impractical for parties to fulfill their obligations. Additionally, significant changes in market conditions, economic downturns, or unexpected regulatory changes can impact parties’ abilities to perform as stipulated in their contracts.

Disagreements over Contract Terms

Finally, contract breaches can occur as the result of disagreements over the interpretation or enforcement of contract terms. This may happen when parties have differing understandings of specific provisions, resulting in conflicts during the performance of their contracts. Also, such a dispute may arise when one party believes the other is not adhering to their agreement’s terms and conditions.

How to Avoid a Breach of Contract

There are certain steps you can take that will help you avoid suffering a breach of contract. First, you should ensure that the language used in your agreement is precise and clear. When certain terms and definitions seem ambiguous, parties can become confused as to the specific goods or services they need to provide. Furthermore, before signing a contract, you should speak with other parties to ensure that their expectations are understood. Make it clear that the other party’s ability to meet their expectations should not rely on future amendments to your agreement.

What Should You Do if Another Party Breaches Your Business Contract in Maryland?

If another party breaches your business contract in Maryland, there are certain steps you can take to protect your interest. Furthermore, by taking the following actions, you may enhance your chances of recovering remedies for the breach:

Review the Contract

Start by thoroughly reviewing your contract to understand the specific obligations and provisions that were breached. Identify the nature of the breach, including the timeline, the specific terms violated, and any relevant remedies or dispute resolution procedures outlined in your agreement.

Document the Breach

Next, you should attempt to document the breach. Keep detailed records of all relevant communication, documentation, and evidence related to the other party’s breach. This includes emails, letters, invoices, delivery receipts, or any other correspondence that demonstrates the other party’s failure to fulfill their obligations. This documentation may be vital in supporting your case if legal action becomes necessary.

Communicate with the Breaching Party

Contact the breaching party in writing to notify them of the breach. In this communication, you should express your intention to seek appropriate remedies. Clearly outline the specific contractual provisions that were violated and offer any supporting evidence you may have gathered. Furthermore, you may wish to request a response within a certain, reasonable timeframe.

Consider Alternative Dispute Resolution

Depending on the severity of the breach and the potential remedies you seek, you may consider engaging in alternative dispute resolution methods before pursuing legal action. Mediation or arbitration can provide an opportunity to resolve your issues with the breaching party with guidance from a neutral individual.

Mitigate Losses

You should also take reasonable steps to mitigate losses stemming from the breach you suffered. This may involve seeking alternative suppliers or service providers, documenting efforts to minimize damages, and keeping records of any additional costs incurred because of the breach.

Contact Our Law Firm

Finally, you should consult with our legal team as soon as you can. We can review the strength of your case and explain the appropriate course of action. Furthermore, we will fight for an outcome that is fair to you.

If You Need Help with a Breach of Contract Case in Maryland, Contact Our Law Firm Today

Get help from our experienced Baltimore contract dispute lawyers by calling the Heyman Law Firm at (410) 305-9287.