Expert Witness and Breach of Contract Problems

Importance of Contracts

Contracts are instruments, usually written, that bind the parties to an agreement. They contain the provisions that explain the agreement between the parties. They explain what each party promises to do and what happens if these promises are not met. Often, when a contract is being disputed, the only relevant question is what is contained in the contract. There are complex rules that state that contract disputes only look to the four corners of the document, so anything off the page may not matter. There are, like in all aspects of the law, exceptions to when this rule does not apply.

Breach of Contract

A party to a contract may breach it. What is considered a breach is often defined in the contract. Typically a breach is a failure to perform one of the material aspects of the contract, such as failing to pay within

a certain period of time or failing to perform a service described in the contract. For contracts that have to do with the sale of goods, the Uniform Commercial Code may dictate any terms that are not defined.

Damages Caused by Breach of Contract

The consequences that flow from a breach of contract vary depending on different situations. Many business contracts are based on monetary promises, so money damages are the most common type of damages and the most common type of remedy that courts provide. Construction companies may fail to meet the specifications under a contract. Businesses may suffer financial loss when a party withdraws from a merger agreement. When a party suffers damages, he or she may have grounds to file a civil lawsuit against the breaching party.

Remedies for Breach of Contract

If one of the parties breaches the contract, there may be a number of remedies that are available. Expert witnesses may be able to help assess the level of damages. Monetary damages may be available in some cases. Specific performance may be another potential remedy. Modifying or canceling the contract may be other possible remedies. The availability of each remedy is based on the specific circumstances, the nature of the contract and state law. Additionally, determining the amount of possible damages and which type of remedy is best in a certain situation typically requires the expertise of an expert witness who can apply knowledge about business, contracts and economic damages.

Types of Damages

The types of damages that the nonbreaching party sustains is based on the particular circumstances, the contract and state law. The most common type of judicial relief is compensatory damages. Compensatory damages are those amounts that are necessary to put the injured party back in the position that he or she would have been had the breach not occurred. There are two types of damages that fall under this category: expectation damages and consequential damages. Expectation damages are what the injured party would have expected to receive if the contract was not breached. An expert witness may be necessary to try to calculate these damages.

In contrast, consequential damages are monetary amounts that are intended to reimburse the non-breaching party for any indirect damages that are sustained, such as the loss of profits. Expert witnesses may help calculate these damages and how the injuries are a result of the breach and that they were reasonably foreseeable when the parties entered into the contract. Contract law experts may help clarify the relationship between the injury suffered and the breach of contract.

Additional Remedies

Restitution is one type of remedy that may be available to a party. It is considered an equitable remedy. The purpose of this type of award is to prevent the breaching party from acquiring unjust enrichment. This remedy is less common than awarding compensatory damages and is generally used when other types of remedies are not appropriate in the circumstances. Expert witnesses may discuss the economic results of the breach of contract and helping to clarify what constitutes an enrichment that is unjust.

Specific performance is an equitable remedy. It is very uncommon and is ordered when other remedies are inadequate or when the party that breached has acted in an egregious manner beyond the typical case. Specific performance requires the breaching party to perform its end of the contract. This remedy may be used when money damages would not be sufficient, such as if a breaching party has pulled out of the sale of real property. Expert witnesses explain why a monetary damage award would be inadequate and why specific performance is the preferred solution.

Contract modification or cancellation may be other remedies, usually after the parties have made a mutual mistake or when it is more equitable to cancel the contract or make a new one. A consulting expert witness may explain why cancelling or changing an existing contract would be in the parties’ best interests.

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.