Having detailed, well-defined contracts might seem like a lot of work until a dispute arises. Whether it’s a simple agreement to buy something or it’s a detailed operating agreement for a partnership, the best way to protect your interests in any transaction or business deal is a written contract that spells out the responsibilities of each party and the process for resolving any potential disputes. People attempt to back out of agreements they have made for many different reasons. Sometimes they are within their rights to cancel an agreement and sometimes they are breaking the agreement. The term “breach of contract” often refers to a situation in which one party fails to meet their contractual obligations. To help Arizona residents understand what makes a valid contract and how to handle a situation where one or more parties are not fulfilling their obligation, we put together this article on what defines breach of contract in Arizona and what you need to know if you are dealing with a potential breach.
WHAT MAKES A VALID CONTRACT?
In the simplest terms, a contract is an agreement that two parties enter under mutually agreeable conditions. A contract has three parts that make it valid and enforceable:
- Offer – A contract includes an offer, written or verbal. The offer is a statement that presents something of value for sale or trade and establishes what each party will bring to the agreement.
- Consideration – The phase ‘consideration’ implies the commodity, tangible or intangible, that will be exchanged as part of the contract. Contracts cannot be enforced unless there is some sort of consideration involved. Consideration can be money, time or effort (aka sweat equity), or goods and property.
- Acceptance – The third part of a valid contract in Arizona is the acceptance through signature or verbal acceptance of all parties.
Thus, any written document that meets the above three criteria can be deemed a contract. However, a legally valid contract might include more than just an offer, consideration and acceptance, as detailed in Arizona Revised Statutes (A.R.S.) Section 44. Generally, the laws of Arizona allow most persons to engage into contracts, with the exception of minors and those deemed mentally incompetent by the state legal system. Arizona does allow for enforceability of verbal contracts in some cases as well.
VERBAL CONTRACTS IN ARIZONA – THE “STATUTE OF FRAUDS”
Arizona law recognizes and validates verbal contracts, yet it is advisable to obtain any important agreements in writing to avoid unnecessary disputes. In fact, per the Arizona “Statute of Frauds”, i.e. A.R.S. 44-101, certain contracts must be in writing in order to be considered valid. For instance:
- Contracts for services that will not be finished or rendered within a year of the contract;
- Goods for sale that are priced above $500;
- Contracts that include someone co-signing a debt for someone else;
- Contracts for the lease (longer than one year) or for the sale of real estate
This list is not exclusive and there are other contracts that must be in writing per the Statute of Frauds. Please review the statute for a full and comprehensive list.
WHAT CONSTITUTES A BREACH OF CONTRACT IN ARIZONA?
In Arizona, a breach of contract case requires three main points of evidence to be established:
- Material – Typically, when a core part of a contract is not fulfilled, or one party fails to live up to their side of the agreement, a breach of contract can be established.
- Partial– This occurs when a contracting party fulfills only a portion of the contract but is still responsible to fulfill remaining obligations of the agreement;
- Anticipatory – It is an overt action by one party which asserts that they will not fulfill their contractual obligations. Such situations may translate into a breach of contract if you have evidence (i.e. email, letter, statement, etc.) of their clear and unequivocal intention to not fulfill their obligations.
In order to successfully claim a party breached its obligations under a contractual agreement, a party in Arizona must claim and prove the following:
- Proving the Existence of a Contract – The above three elements of a breach of contract claim must be proved by a preponderance of the evidence in Arizona. In other words, you must prove to an Arizona court/jury that there is a 51 percent chance or more that your version of events occurred. So, you must prove the existence of an offer, an acceptance, and consideration in order to establish the existence of a contract.
- Demonstrate That You Fulfilled Your Commitments – Further, you must prove that you executed your commitments or that you have a justifiable reason for not doing so. This part of proving your case will come down to providing evidence of your significant performance of your obligations in the contract. Partial performance of your obligations can be enough to prove the other party’s breach if you only stopped that performance after becoming aware of and notifying the other party of their breach.
- Establish the Other Party Failed to Meet Obligations – You must also be able to prove the defendant failed to fulfill their obligations. It is important to collect any evidence of your attempts to notify the other party of their breach per the details of the contract and document their failure to perform.
- Demonstrate Damage Caused by Breach – The last aspect of a breach of contract claim is to show that you have suffered monetary damages as a direct cause of the other party’s failure to perform their obligations. Examples of damages could be the loss of other business deals or revenue because the other party did not perform as expected.
Just like it is important to get important contracts in writing, it is equally important to document all the evidence of a potential breach of the contract. It is significantly easier to prove a breach of contract in Arizona with detailed and organized evidence of the contract, your performance, the other party’s failure to perform, your attempts to let the other party cure the breach, and the damage caused to you by their breach of contract.
Statute of Limitations for Breach of Contract in Arizona
If someone has breached a contract and you have suffered damages as a result, it is important to address the matter as soon as possible. For starters, there are different Arizona statutes for the type of contract and the amount of time you have to address the matter in court. A.R.S. 12-548 requires a claim for breach of contracts for debt to be filed within six years of the breach. For debts without evidence of a written contract, per A.R.S. 12-543 the matter must be filed within three years of the breach. Timelines may vary depending on the discovery of the breach so it is vital to consult with an experienced Arizona attorney to advise you of your rights and ability to pursue a potential breach of contract action.
Find an Arizona Attorney for Breach of Contract
Dealing with a breach of contract in an important business deal or large transaction can be frustrating and time-consuming. It is essential to stay calm as you attempt to deal with the other party and find an experienced attorney to handle the matter once the other party has made it clear they will not be performing their obligations. The attorneys at RSN Law have worked with individuals and businesses for decades on all types of breach of contract. Our firm can quickly assess the contract and potential breach to decide on the best path to resolution. If needed, our experienced attorneys can vigorously pursue the matter in court. Contact RSN Law today at 480-712-0035 to schedule an initial consultation or make an appointment on our contact us page.
RSN Law intends this article to be for informational purposes, not to be relied on a specific legal matter, and does not create an attorney-client relationship.