Breach of Contract

Many of your most important rights as a California employee are statutory rights. This means that State or Federal lawmakers have created and published laws that protect you from discrimination, ensure you receive a minimum wage, and increase your pay when you work overtime. At Spencer Young Law, we understand the complex body of laws that establish these rights and use them to your advantage.

But you may have additional rights that are created not by statute, but by contract. A contract is an agreement between two or more parties to exchange things of value. It could involve trading physical property, providing services for money, or making reciprocal promises to take certain actions or refrain from certain actions.

Not all agreements are contracts. A contract is an agreement that can be enforced in court. It establishes your right to “performance” under the contract: the other parties must live up to what they have promised. If they don’t, they have breached the contract and the court may award you damages based on the harm you have suffered.

An agreement must meet three elements to become an enforceable contract: offer, acceptance, and consideration.

An offer occurs when one party proposes a set of terms to the other party. Acceptance occurs when the other party agrees to the proposed terms. If a party agrees to part of the offer, but conditions the agreement on new terms that were not previously discussed, then they have not accepted the agreement. Rather, they have made a counteroffer, and negotiations must continue until both parties agree to the same terms. Courts require a clear understanding of the terms of an agreement in order to enforce it.

Consideration is the exchange of things of value. Courts do not believe that both parties are equally invested in an agreement unless they each get something out of it. Consideration serves as evidence that both parties intend to be bound by the terms of the agreement. If each party is promised something of value in exchange for their performance, they likely want the agreement to be binding.

Agreements that include offer, acceptance, and consideration can be enforced as contracts even if they are made orally or accepted by handshake. However, unwritten agreements can be more difficult to enforce since there is not an objective record of the terms that were agreed to. Moreover, certain types of agreements are only enforceable if they are in writing. For example, contracts to sell real estate or to employ someone for more than one year are not enforceable unless both parties sign a written agreement. No matter what type of agreement you are contemplating, you should consult an experienced contract attorney to make sure it will be enforceable. At Spencer Young Law, we write, interpret, and enforce all sorts of contracts to protect your interests above and beyond your statutory rights.

• Example 1: Big Soda Corporation hires Maxine as its Director of Human Resources. Her general terms and conditions of employment are regulated by the Labor Code. However, Big Soda offers Maxine a unique benefit: they will reimburse her commute mileage in her personal car for as long as a Big Soda advertisement is painted on her car. Maxine accepts these terms. While the Labor Code entitles Maxine to reimbursement for her business expenses, the statute does not cover her commute to her regular workplace. Reimbursing her for this expense goes above and beyond what the law requires. Thus, it is a thing of value and constitutes consideration. Likewise, Big Soda receives something of value: advertising space, which increases its revenue. This agreement is a contract. If Big Soda stops reimbursing Maxine’s mileage, Maxine can enforce the contract in court and recover what she is owed.
• Example 2: Ferdinand e-mails his neighbor, Rachel. He offers to paint her garage if she allows him to permanently park his vehicle in her driveway. Rachel writes back that she needs to keep her driveway open for guests, but she will pay Ferdinand $500 to paint the garage. Ferdinand never responds. Rachel did not accept Ferdinand’s offer, and Ferdinand did not accept her counteroffer. Although various forms of consideration were offered, they do not have an enforceable contract.
• Example 3: Same as above, but although Ferdinand does not respond, he paints Rachel’s garage anyway. Although Rachel is happy with his work, she does not think she is required to pay him because he never accepted her counteroffer. However, the court may interpret his work as sufficient proof of acceptance, and Ferdinand may have an enforceable claim on the terms Rachel offered.
• Example 4: Malena has a fourteen-year-old granddaughter, Jemma. Malena writes a letter to Jemma, stating: “When you turn 16, I promise to give you $20,000 to buy your first car, provided you sign this letter and return it to me.” Jemma signs the letter. However, it is not an enforceable contract. Although there was an offer and an acceptance, the consideration only went one way. Malena receives nothing of value, so her promise is not enforceable in court.

If you believe someone has breached a contract with you, or if you want to know whether an agreement is enforceable, call an experienced contract lawyer at Spencer Young Law today for a free consultation!