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Colorado and Denver Business Attorney and Breach of Contract Attorney
When dealing with a corporate law issue or business dispute, hiring a top Colorado or Denver business lawyer or business attorney can help significantly in resolving legal issues. In particular a business lawyer can help address common legal issues that many start-ups, small businesses, and large businesses may face.
Among other things, business attorneys can help assess threats of business litigation, help assess breach of contract disputes, and help enforce or defend against breach of contract lawsuits.
Additionally, business attorneys can function as start-up general counsel lawyers, small business general counsel lawyers, and corporate general counsel lawyers by rendering business legal advice on an as needed basis.
This article is designed to legal issues that large businesses, small businesses, start-ups, and Denver and Colorado business lawyers commonly face.
Business Attorneys Can Assist with Legal Disputes and Business Litigation
A Colorado and Denver business litigation attorney can help large businesses, small businesses, and start-up businesses navigate the intricacies of threatened or pending litigation.
Colorado law recognizes a variety of potential claims businesses can face in a lawsuit. A more detailed list of business torts and business claims recognized in Colorado courts is available here. A condensed list of business tort and business litigation claims that a business attorney can help with is provided below.
• Business attorneys can help with breach of fiduciary duty claims
• Business attorneys can help with breach of contract claims
• Business attorneys can help with fraud or misrepresentation in the inducement of a contract claims
• Business attorneys can help with intentional interference with contractual relations claims
• Business attorneys can help with intentional interference with prospective business advantage claims
• Business attorneys can help with trade secret misappropriation claims
• Business attorneys can help with unfair competition claims
• Business attorneys can help with constructive fraud claims
• Business attorneys can help with corporate waste and mismanagement claims
• Business attorneys can help with usurpation of corporate opportunities claims
One of the more common types of claims corporate lawyers, small business attorneys, start-up attorneys, and large business attorneys address are breach of contract claims. Breach of contract claims are discussed next.
Breach of Contract Lawyers Can Help Businesses Navigate Contractual Disputes
Contracts form the backbone of business dealings. They allow businesses to transact with each other on specified terms and with known risks and obligations. They bring predictability and credibility to business transactions. With contracts, parties are able to negotiate and clarify the obligations they are expected to fulfill as well as the benefit they are expected to receive.
Because of the importance of contracts, retaining a business attorney or contract attorney to review, negotiate, or advise on a contract can significantly aid in protecting a business and ensuring it is able to continue conducting its affairs. Common examples of contracts businesses and business attorneys may deal with include:
• Buy and sale agreements for the purchase of a business or business assets
• Purchase agreements for the sale of land
• Franchise agreements
• Employee contracts such as independent contractor agreements and non-compete agreements
• Confidentiality agreements and non-disclosure agreements
• Contracts for the purchase or sale of goods and services
• Contracts for the purchase or sale of manufacturing equipment
• Leases for commercial properties and office spaces
• Breach of a lease agreement by a tenant
• Breach of a lease agreement by a landlord
• Solar contract and solar lease agreements
• Car leases and equipment leases
• Agreements to protect intellectual property, such as trade secrets or licensing agreements
• Insurance agreements and other contracts to manage liability or indemnity provisions
• And specific performance requirements for real estate purchase and sale agreements
Importantly, while contracts set the obligations and benefits of the parties, that does not mean all contracts are properly or fully performed. When the obligations of a contract go unfulfilled it is termed a breach of contract.
In such circumstances hiring a contract lawyer or business lawyer to help enforce or defend against a breach of contract claim can determine the success of death of a business. Breach of contract claims, while simple in principle, can quickly become nuanced. Basic principles of contract law are discussed below to assist large businesses, small businesses, and start-ups with potential contract disputes.
Business Attorneys and Breach of Contract Attorneys Can Help Determine Whether a Binding Contract Was Formed
The first thing a business attorney or breach of contract attorney can assist with in a breach of contract claim is determining whether of not a contract was actually formed. Put simply, in order for a breach of contract claim to exist there must have been a contract in existence that went unfulfilled. If there is no contract, then there is no breach of contract claim.
One of the first principles of contract law is that in order for a contract to be formed, there must have been a “meeting of the minds” as to the essential portions of the agreement. That is, at the time the contract was entered into, the parties needed to have a mutual understanding of the facts forming the basis of the contract and mutual understanding of the terms of the contract.
Where there is no “meeting of the minds,” meaning the parties were not on the same page as to the basis and terms of the contracts, various defenses can preclude enforcement of the contract, including a defense based on mutual mistake.
In general, where there is a mutual mistake as to the terms and intent of the contract sufficient enough to prevent a “meeting of the minds,” the contract will be deemed void and unenforceable. See England v. Propane, 395 P.3d 766, 771 (Colo. 2017); Agritrack, Inc. v. DeJohn Housemoving, Inc., 25 P.3d 1187, 1192 (Colo.2001).
While simple in principle, this “meeting of the minds” component can become nuanced if the parties were mistaken as to the facts underlying the contract or the essential terms of the contract. A breach of contract attorney or business attorney can help determine whether there has been a sufficient “meeting of the minds” to render a contract enforceable.
Second, in addition to the “meeting of the minds” requirement, the elements of a contract must also be met. Specifically, formation of a contract requires:
• An offer that sets forth the terms of the contract
• Acceptance of that offer by the other party
• And consideration to support the formation of the contract
Legally speaking, an offer is a promise to do something, or refrain from doing something, in exchange for something else. Put simply, the offer represents the terms of the contract.
Notably, in order for there to be a legally binding offer, the terms of the offer must be sufficiently definite that the promises and performances of each party under the contract are reasonably ascertainable. A legally binding offer is sufficiently definite that, in order to create a binding contract, the other party simply needs to accept the offer and no further negotiations are necessary to determine each party’s obligations under the contract.
Acceptance occurs where there are sufficient words or conduct to manifest an intention to accept the offer. Consulting with a business lawyer or contract attorney can help determine whether a particular action was sufficient to rise to the level of a legally binding offer and, along these same lines, whether a party’s conduct in response to the offer was sufficient to manifest an intent to accept the offer. See Watson v. Public Service Co., 207 P.3d 860, 868 (Colo. App. 2008); Marquardt v. Perry, 200 P.3d 1126, 1129 (Colo. App. 2008).
The third element for formation of a contract, consideration, is essentially the requirement that there is actually a bargained for exchange of promises or responsibilities to support the contract. That is, that mutual obligations are actually formed and owed as opposed to non-binding promises.
Examples of non-binding promises or statements that do not create a contract include promises to gift or donate something of value and promises to perform legal duties that were already owed. A business attorney or contract lawyer can help assess whether or not there is sufficient consideration to create a legally binding contract.
Importantly, if any of the above elements fail, no contract has been formed and a business may not pursue a breach of contract action. Compass Bank v. Kone, 134 P.3d 500, 502 (Colo. App. 2006).
Business Attorneys and Breach of Contract Attorneys Can Help Determine Whether There Actually Has Been a Breach of Contract
If all of these elements are met, then a binding contract is formed. Once a contract is formed, the parties are required to perform their obligations under the contract and as specified in the contract.
If a party does not perform its obligations under the contract, then that party may be sued for breach of contract. A business lawyer or contract lawyer can help assess whether there is a proper breach of contract claim. The elements for a breach of contract claim are:
(1) There is a valid and binding contract
(2) The plaintiff has performed its obligations under the contract or its performance is otherwise excused
(3) The defendant failed to perform its obligations under the contract, and
(4) That breach resulted in damages to the non-breaching party.
See Saturn Systems, Inc. v. Militare, 252 P.3d 516, 529 (Colo. App. 2011).
Importantly, for the second element regarding performance by the non-breaching party, not all breaches of contract excuse the non-breaching party from fulfilling its obligations under the contract.
Where the non-breaching party’s performance is not excused, that party must still substantially perform its obligation under the contract even though the other side breached the contract first.
Substantial performance requires a party to perform all of the major aspects of the contract and allows a party to recover on the contract even though it may have deviated in insignificant particulars that do not detract from the major benefit of the contract. Rohauer v. Little, 736 P.2d 403, 410 (Colo. 1987).
Examples of scenarios where a non-breaching party’s performance may be excused, and thus the non-breaching party does not have to fulfill its obligations under the contract, include circumstances where the other side committed a material breach, as opposed to an immaterial breach of the contract, and circumstances where the breaching party gave notice of anticipatory repudiation of its obligations under the contract.
While the base level requirements governing contract law seem relatively straight forward, a business contract dispute can quickly become complex. For example, while formation of a contract may be clear, the actions a party is allowed to take in the face of a potential breach of that contract by another party can be unclear and convoluted.
The contract may have specific terms that govern what has to be done in case of a breach, a party may have ongoing obligations under the contract even though the other party has breached the agreement, and a party may have a duty to mitigate damages assuming there is an actionable breach of contract claim. Accordingly, a business attorney or breach of contract attorney can help sort out these issues and advise as to possible course of action for businesses facing a breach of contract claim.
Business Attorneys and Breach of Contract Attorneys Can Help Determine Whether an Anticipatory Repudiation Has Occurred
Anticipatory repudiation or anticipatory breach occurs where a party to a contract indicates, in advance of when its performance is due under the contract, that it will not be fulfilling its obligations under the contract. Businesses faced with an anticipatory breach or anticipatory repudiation may have issues in determining how to respond and whether or not to suspend their performance under the contract. Hiring a business attorney or breach of contract attorney can help navigate these types of difficult decisions.
From a legal perspective, anticipatory breach, or anticipatory repudiation, occurs where a party has indicated a definite and unequivocal manifestation of an intent to not render its contractual performance as required by the contract. Importantly though, even where a party indicates that intent for anticipatory repudiation or breach, that party may retract that repudiation up until its performance is due or until the non-injured party has materially changed its position in reliance upon that repudiation. See Schneiker v. Gordon, 732 P.2d 603, 611 (Colo. 1987)
That is, a party that has previously indicated it will breach the contract has the right and ability to retract that indication and, instead, indicate it actually will meet its obligations under the contract. However, that party loses that right once the time for its performance has run or loses that right once the non-breaching party has taken material actions in reliance upon that repudiation. See Johnson v. Benson, 725 P.2d 21, 25 (Colo. App. 1986).
Examples of material actions by the non-breaching party that may negate the ability of the breaching party to retract its anticipatory repudiation include the expenditure of funds by the non-breaching party to obtain substitute goods or services it expected to receive under the contract, retaining an attorney or starting legal action to pursue a breach of contract claim, and taking actions to unwind other contracts it expected to fulfill as a result of receiving the expected goods or services under the contract. See Johnson v. Benson, 725 P.2d 21, 25 (Colo. App. 1986).
Due to the nuance of these issues, retaining a Colorado or Denver business attorney or breach of contract attorney may help determine whether the particular actions of a party arise to the level of an anticipatory repudiation or breach and, similarly, whether the anticipatory repudiation or breach can still be retracted.
Business Attorneys and Breach of Contract Attorneys Can Help Determine Whether a Material Breach of Contract Has Occurred and Whether a Party’s Performance Obligations Have Been Suspended
Where a breach of contract has occurred – be it through anticipatory repudiation, anticipatory breach, or through a normal breach where the party simply doesn’t perform under the contract – the non-breaching party’s duty to perform under the contract may be suspended depending on whether or not the breach is material. Hiring a Colorado or Denver breach of contract attorney or business attorney can help determine whether a breach is material and, thus, a business’s continuing obligations under the contract.
More specifically, a material breach is a breach of a term in the contract that goes to the essence of the contract. In other words, a material breach is simply a breach of an important term of the contract as opposed to a technical, or minor breach of the contract. The materiality of a particular term is assessed from the perspective of when the contract was formed. In other words, a term is considered material if the parties would have considered it an important term at the time the contract was entered into. See Coors v. Security Life of Denver Ins. Co., 112 P.3d 59, 64 (Colo. 2005).
If a material breach of the contract has occurred, then the non-breaching party’s performance under the contract is suspended. That is, if the breach is important enough as to be a material part of the contract, then the non-breaching party does not have to perform its obligations under the contract. Instead, the non-breaching party can immediately pursue a breach of contract claim. See Whiting Oil Gas Corp. v. Atlantic Co., 321 P.3d 500, 504 (Colo. App. 2010).
Conversely, if a party breaches a contract but it is an immaterial term, or minor breach of the contract, then the non-breaching party’s performance is not suspended. The contract is still in effect and the non-breaching party still must render its required performance. However, if the non-breaching party incurs damages from that minor breach, that party can still sue for damages.
That is, an immaterial breach does not mean there are no legal routes to pursue damages, it simply means the non-breaching party must still perform under the contract but can also pursue a breach of contract claim to remedy any injuries incurred as a result of the minor breach. See Bonifas v. Bonifas, 879 P.2d 478, 479 (Colo. App. 1994).
Determining whether a breach of a contract is material enough to suspend a party’s performance is an important step in determining how a business should properly respond to a breach of contract action. A business could potentially suffer liability for suspending performance for a breach that the business thinks is material but, is later found to immaterial and its performance was not excused. I
In such circumstances, the business could actually be a liable for breach of contract to the other party even though the business was not the first party that breached the contract. Accordingly, if faced with an anticipatory repudiation or suspension of contractual performance issue, hiring a business attorney or breach of contract attorney can help determine the appropriate course of action.
Business Attorneys and Breach of Contract Attorneys Can Help Determine What Types of Damages for Breach of Contract Are Available
Where a breach of contract has occurred, retaining a business lawyer or breach of contract lawyer can help with assessing what types of damages are available for a business to pursue. In particular, the breach of contract types of damages generally available for a breach of contract claim include:
• Expectation damages
• Reliance damages
• And Restitution damages
Expectation damages are designed to place the non-breaching party in the position it would have been in had the contract been fully performed. That is, expectation damages are designed to give the non-breaching party the benefit it expected to receive had the contract not been breached. See McWhinney Centerra Lifestyle Center LLC v. Poag & McEwen Lifestyle Centers-Centerra LLC, 2021 COA 2, ¶ 55 (Colo. App. 2021).
Expectation damages are measured by the loss in value to the injured party that was caused by the breaching party’s failure or deficiency. A common example of expectation damages is compensation for the lost profits a party would have expected to receive if the contract had been fully performed. U.S. Welding, Inc. v. Advanced Circuits, Inc., 420 P.3d 278, 282 (Colo. 2018).
In contrast to expectation damages, which look at the position the parties would have been in had the contract been performed, reliance damages are the opposite. Reliance damages are intended to put the non-breaching party in the position it would have been in had the contract never been entered into.
In effect, reliance damages are intended to rectify any expenditures or loss of income a party incurred as a result of relying on the existence of the contract and assuming the contract would be properly performed.
Examples of reliance damages include money the non-breaching party expended in performing its obligations under the contract or money the non-breaching party expended with the expectation it would receive the bargained for performance under the contract. See Snow Basin, Ltd. v. Boettcher Co., Inc., 805 P.2d 1151, 1153 (Colo. App. 1990).
Lastly, restitution damages stem from the notion that a breaching party should not be able to profit from breaching the contract. Restitution damages are measured by the defendant’s gain in breaching the contract and awards those damages to the non-breaching party to prevent any unjust enrichment of the breaching party.
Importantly, however, restitution damages are commonly seen as an equitable remedy and are generally disfavored where traditional expectation damages or reliance damages are available. See Rocky Mountain Natural Gas, LLC v. Colo. Mountain Junior Coll. Dist., 385 P.3d 848, 855 (Colo. App. 2014).
While expectation damages, reliance damages, and restitution damages may be available in a breach of contract claim, an injured party can only elect and be awarded one. Double or triple recoveries on different breach of contract damage theories are generally not allowed.
In establishing breach of contract damages the plaintiff has the burden of presenting sufficiently competent evidence to determine the amount. That is, damages asserted but that are too speculative and are not readily determinable will not be awarded. See Husband v. Colorado Mountain Cellars, Inc., 867 P.2d 57, 59 (Colo. App. 1993); Earthinfo v. Hydrosphere Resource, 900 P.2d 113, 117 (Colo. 1995).
Hiring a breach of contract lawyer or business lawyer can help determine which damages an injured party should elect and determine the best evidence to support those damages.
Business Attorneys and Breach of Contract Attorneys Can Help Determine if There is Ambiguity in a Contract
While in principle a contract dispute may seem simple – a party either breached a contract or it did not – the reality is it is often hard to capture all contingencies and all situations that could arise in contracting with another party.
Accordingly, what may seem like an unambiguous contract term when drafted can quickly become ambiguous when real-world circumstances arise. This, in turn, results in ambiguity as to whether the contract has actually been breached or not. A Colorado or Denver business lawyer or breach of contract lawyer can help a business assess how much ambiguity there is in a particular contract and, in turn, the likelihood that a breach of that contract has occurred.
When faced with interpreting a contract, general principles of contract interpretation law apply. Specifically, in interpreting a contract, courts first look to the contract itself, give the words in the contract their plain and ordinary meaning unless specifically defined in the contract, and construe the language of the contract in the context of the contract as a whole with the aim to give a consistent and harmonious result. See Christmas v. Cooley, 158 Colo. 297, 301, 406 P.2d 333, 335 (1965); Bush v. State Farm Mut. Auto. Ins. Co., 101 P.3d 1145, 1146 (Colo. App. 2004)
For unique, technical, or industry specific language in the contract, courts may accept and consider evidence other than the contract itself – that is, extrinsic evidence – to aid in construing the language of the contract and determining whether or not it is ambiguous. Examples of such extrinsic information include evidence of local usage, evidence of usage or meaning in a particular industry, and the circumstances surround the making of the contract. See Cheyenne Mountain School v. Thompson, 861 P.2d 711, 715 (Colo. 1993).
Using the plain language of the document itself, and, if necessary, extrinsic information to help interpret unique terms in the document, the court then determines if the contract is sufficiently definite and clear as to be unambiguous. If the contract is found to be unambiguous, the contract will be construed as written. Courts will not rewrite the terms of the contract. See Helmericks v. Hotter, 30 Colo. App. 242, 244 (Colo. App. 1971).
If, however, the court looks at the contract and determines the disputed terms are susceptible to more than one interpretation and, therefore, ambiguous, the interpretation of those terms then becomes a question of fact.
In such circumstances, in construing the contract the fundamental aim is to give effect to the intent of the parties. Accordingly, in discerning that intent, courts may accept further extrinsic evidence, such as the testimony of the parties as to the intent of the contract. It is then the fact finder’s responsibility, which is either the court or jury depending on if a jury trial has been selected, to discern that intent and construe the contract in conformance with that intent. See Cheyenne Mountain School v. Thompson, 861 P.2d 711, 715 (Colo. 1993).
Where a contract is ambiguous, hiring a Colorado or Denver business attorney or breach of contract attorney can help determine ways the contract may be construed and potential evidence needed to support that construction.
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