Business Isn’t Always Simple: Here’s What You Need to Know If The Other Party Has Violated a Contract

May 27, 2020

No business of any size would reach its full potential if it weren’t for the help of other businesses.  Relationships with vendors, clients and property owners must remain strong in order for businesses to maintain productivity and best serve the public.  But what happens when the other party is simply not holding up their end of a contract as planned?  If these parties aren’t held accountable for their actions, it could lead to a disruption in the operations of the affected business or cause the business to shut down altogether.

In New Jersey, verbal and oral contracts that aren’t under the Statute of Frauds are just as binding and enforceable as written contracts.  Under any type of contract, oral or written, three things must take place: 1) a distinct offer made by one party to the other; 2) an acceptance of the offer by the recipient; and 3) consideration, which is the result of a promise to do something you’re not legally obligated to do, or a promise not to do something you legally have the right to do.  The court will find the existence of consideration as long as both parties receive something and fully understand the terms of the contract.

Under the New Jersey Statute of Frauds, these types of contracts must be in writing:

  • A loan, grant or extension of credit for greater than $100,000 made by a person or entity in the lending business
  • An agreement in which a creditor agrees not to exercise any contractual remedy when the amount involved is greater than $100,000
  • Real property transactions (real estate), including commissions on both the sale and leases of real estate
  • The promise by one party to be responsible for the obligations or debts of another
  • Leases with terms greater than 3 years
  • Prenuptial agreements made after February 19, 2007, prescribing how property will be divided in the event of a divorce

Other than these, oral contracts are legally enforceable in the state of New Jersey.  However, it is still recommended that business contracts of any type are in writing, and it can be difficult (but not impossible) to prove that the defendant violated the terms otherwise.  To prove a breach of contract (oral or written), you must have evidence of the following: 1) you and the other party entered into a contract containing certain terms; 2) you did what you were required to do; 3) the defendant did not do what they were required to do per the terms of the contract; and 4) the defendant’s breach caused a loss to your business.

A copy of a written agreement (if available), as well as documentation of lost income, such as monthly sales reports, will be necessary to prove a breach of contract and the losses incurred as a result of that breach.  As with any litigation matter, it is best to have a skilled attorney by your side that is familiar with the legal system and may anticipate loopholes that might hurt your case.  At The GC Law Firm, we have many years of experience in contract litigation and will make sure the defendant is held accountable for their actions.  Contact us today to set up a consultation and get started.

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