Pleading in the Alternative – Options When Your Contract May Not be Enforceable

contract

As a business owner, you enter numerous agreements every year. From employment contracts and leases for office space to agreements for the delivery of goods and materials. Often times businesses require the maintaining and honoring of such agreements to ensure that the business, its owner, and all of its employees can conduct its day-to-day operations.

What happens then when a party to one of these agreements, and their failure to honor your agreement harms your business? The standard option would be to pursue the party in breach of your agreement for damages under a breach of contract claim. However, there may be times when a breach of contract claim is unavailable to you due to the circumstances of the breach, or the nature of the contract itself. But you may have other options.

As a litigation law firm with a concentrated focus on business disputes, we are intimately familiar with contractual disputes and the options available to business owners when they are unable to pursue a legal claim for breach of contract. Let’s discuss the reasons why a breach of contract claim may not be available to you and the possible claims that can be pursued as an alternative to a breach of contract claim.

Reasons Breach of Contract may not be a Valid Claim

There exist numerous reasons why a breach of contract claim may not be a valid claim to pursue when your business has been damaged by a breach of an agreement. Some of these reasons include:

  • Lack of a Written Agreement: The handshake agreement is still common for many people, including business owners, when there is mutual trust and understanding between the parties to an agreement, they may feel it is unnecessary to paper their agreement. However, trust can break down and relationships sourer, and one of the parties may believe they can break the non-written agreement without any recompense.
  • Illegality: Contracts that are against public policy are generally unenforceable. For example, contracts in violation of regulatory requirements may be deemed unenforceable.
  • Lack of Consideration: A valid contract requires consideration, which refers to the exchange of something of value between the parties. If a contract lacks consideration or if the consideration is illusory (i.e., promises that are not supported by actual value), it may be unenforceable.

Understanding the potential reasons why a contract may not be enforceable is essential for businesses to protect their rights and interests. By being aware of these factors, businesses can navigate contractual relationships more effectively and seek legal remedies when necessary to safeguard your investments and mitigate potential risks.

Alternative Claims

If you have reason to believe that a contract or agreement between your business and another party may not be enforceable, there remain several separate claims that you may be able to pursue as an alternative to a breach of contract claim. Such claims may include:

  • Breach of Implied Contract: There are two types of implied contracts under New York Law. The implied-in-fact contract formed when the parties' actions and conduct imply an agreement and the implied-in-law contract, which forms when one party has received a benefit, such as goods or services, from another party, and it would be unjust for the receiving party to retain that benefit without compensating the providing party.
  • Unjust Enrichment: This cause of action may be available where a defendant received a benefit that they should not have received, and the plaintiff suffered a corresponding loss.
  • Breach of Fiduciary Duty: If the breaching party owed a fiduciary duty to the aggrieved party, such as in cases involving a director, officer, or agent of the business, and the breaching party breached that duty, a claim of breach of fiduciary duty may be applicable.
  • Quantum Meruit: Quantum meruit allows a party to seek compensation for the reasonable value of goods or services provided to the breaching party, even if there was no express contract or the contract was breached.
  • Conversion: A plaintiff may assert a claim for conversion if the defendant wrongfully took possession of the plaintiff's property and exercised dominion and control over it.

The above is not an exhaustive list of possible claims that may be available when a party breaches an agreement with you or your business, just the most common ideas. When faced with the breach of an agreement that is affecting your business, it is important to be aware that alternative causes of action exist that can provide additional legal avenues for seeking redress.

Conclusion

Understanding what claims are available to you when a party breaches an agreement with you and your business is an important initial step in both limiting and recovering the damages from such a breach. If you have a contract, that you are concerned is unenforceable, or if someone has breached an agreement with you and your business, causing damages to your business, our litigation law firm is here to help. We have a dedicated team of attorneys who focus their practice on business disputes and are experienced with contractual disputes and claims arising from broken agreements. Contact us today to discuss your situation and explore your legal options.

If you are facing similar concerns or if you have questions about your business litigation dispute, please feel free to contact us here. We have many years of experience handling such matters and will be able to assist you in resolving the dispute.

To learn more about these topics, you may want to review our information provided on these pages: Breach of Contract, Employment Law, Business Litigation, and Employment Contracts.

You may learn more about us and how we operate by visiting these pages: About Us, What Sets Us Apart, and Learn More About Us.

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