Under Colorado law, there are four elements to a breach of contract claim that the plaintiff must prove:
- The existence of a contract;
- Some substantial performance by the plaintiff (or legal excuse for not performing);
- Failure to perform the contract by the defendant; AND
- Resulting damages to the plaintiff.
Each element of a breach of contract case has extensive case law and nuances.
ELEMENT 1: The existence of a contract
The ingredients to a valid contract are (1) offer, (2) acceptance, and (3) consideration. These ingredients mean that one of the parties made an offer that was accepted by another. This requires that the offer not be countered or rejected; it was fully accepted. Consideration requires that both parties receive something of value out of the contract.
In most cases, contracts can be written, oral, or even both. In other words, not all contracts need to be written. There are specific contracts that must be in writing pursuant to the “statute of frauds.” Colorado law has approximately two dozen types of contracts that fall under the statute of frauds, with the most common being:
- Credit agreements
- Sale of real estate
- Sale of goods for the price of $500 or more
- Leases that last longer than a year
- Prenuptial or postnuptial agreements
- Any contract that cannot be performed within one year
ELEMENT 2: Some substantial performance by the plaintiff (or legal excuse for not performing)
The plaintiff must show that they substantially performed the essential obligations of the contract. In determining whether the plaintiff “substantially” performed, the court looks to whether the defendant received the benefit(s) of the contract. Having an experienced trial attorney will assist in gathering and presenting clear and concise evidence showing performance by the plaintiff and benefit of the defendant.
ELEMENT 3: Failure to perform by the defendant
To satisfy the third element, the plaintiff must show that the defendant failed to perform their essential obligations under the contract. Under limited circumstances, defendants are allowed to not perform without being held liable. These limited circumstances are called “defenses” and are discussed later.
ELEMENT 4: Damages for the plaintiff
The last element requires the plaintiff to show they suffered damages. Damages are any loss the plaintiff suffers from the defendant’s failure to follow through with the promises made in the contract. Even if there is a complete breach of contract, a plaintiff will generally not win the lawsuit unless there are some monetary damages.
Colorado plaintiffs can only recover damages that were the natural and likely result of the defendant’s breach of contract. Colorado law further details that the damages awarded to a plaintiff should put the plaintiff in the position they would have been had the contract been completed.
Sometimes a plaintiff is able to prove that the defendant breached the contract, but cannot prove the amount damages, if any, they suffered. In these situations, Colorado law allows for the award of nominal damages, which are typically awarded in as a very low amount.
Alternative to monetary damages, Colorado plaintiffs can seek specific performance as their remedy. Specific performance means the court will require the defendant to complete their contractual obligations.
Defenses to a Breach of Contract Claim
Colorado allows for specific defenses in a breach of contract lawsuit. If the defendant can prove one or more legal defenses, they will not be held liable for their breach of contract.
DEFENSE: Statue of Limitations
A statute of limitations is a time frame in which the breach of contract lawsuit must be filed with the court. The case will be dismissed if the lawsuit is brought past the statute of limitations. For most breach of contract cases, the statute of limitations is three years; however, there are many exceptions to the three-year statute of limitations.
A minority (under the age of 18) can void a contract so long as they render the contract void prior to the age of 18 or within a reasonable time thereafter.
DEFENSE: Impossible (or Impracticable) to Perform
If something arises outside of the defendant’s control that causes the defendant to be unable to perform the contract, they may be excused from performance. Colorado law states that while the defendant need not prove it is impossible to perform the contract, they must prove that it is impracticable for them to perform. For performance to be impracticable, the defendant must show that performance could only be completed through extremely unreasonable difficulty, expense, injury, or loss.
DEFENSE: Fraud in the Inducement/Undue Influence/Duress
Fraud in the inducement requires that the defendant show that they entered the contract because of the plaintiff’s lies and/or misrepresentations, and if not for the misrepresentation, the defendant never would have entered the contract.
Undue influence requires the defendant to show that they were forced or dominated by the plaintiff into entering the contract. The force must have been exerted such that the plaintiff overcame the defendant’s free will.
Duress means that the defendant had no choice but to enter the contract because of a wrongful act or threat.
DEFENSE: Mental Incapacity
To show mental incapacity, the defendant must show that they were insane, mentally ill, intoxicated to a high degree, or other conditions of the mind such that they were incapable of entering into the contract.
There are many other defenses available in Colorado breach of contract cases. It is important that you timely consult with an experienced breach of contract lawyer. An experienced attorney will apply the laws to the specific facts of your case.
If you are a plaintiff or a defendant in a contract lawsuit, contact Burnham Law today. The nuances of contract law are complex, and our lawyers have the experience and knowledge to help.