A significant number of small claims cases involve breach of contract cases. A contract is any agreement between individuals or businesses in which one side agrees to do something for the other in exchange for something in return. For example, A asks B to paint his kitchen for $3,000 and B agrees. The agreement can be written or oral (in most situations), or implied from the circumstances. These cases end up in small claims court when one of the parties to the contract fails to perform in accordance with the terms of the agreement.
In order to win a breach of contract case, you will need to establish that:
- a contract existed
- the contract was broken
- the defendant is the proper party to sue, and
- you suffered a monetary loss.
Small claims breach of contract cases often involve disputes where one party fails to pay money. Hardly a day goes by in any small claims court when someone isn't sued for failing to pay the phone company, the local hospital, a friend (former, probably), a relative, or even late fines to the public library. In many situations, getting a judgment for an unpaid debt involves no more than stating that the defendant made a commitment to buy certain goods or services, that they were, in fact, provided, and that a legitimate bill for X dollars has not been paid.
As a plaintiff, you must normally prove:
- the identity of the debtor
- the existence of a contract with the debtor
- that you kept your promises under the deal (normally that you provided the goods, services, or loan), and
- that the debt hasn't been paid.
If you are a defendant and believe you have a good defense, you'll normally need to prove:
- the goods or services you were supposed to receive were delivered late or not at all or were seriously defective
- the plaintiff never lent you the money in the first place
- you already paid back some or all the money the plaintiff lent you, or
- the plaintiff agreed to a subsequent contract to forgive the debt or give you more time to pay.
If you are sued because you owe money to a company from which you bought consumer goods or consumer services, research your state's consumer protection laws. Also, if a seller of consumer goods or services violates a consumer protection law, then you may be able to get your money back or cancel your deal with no obligation to pay.
If fraud is present as part of a transaction, the deal can be canceled and your money refunded. Fraud can be:
- intentional misrepresentation (a deliberate, false statement about a product or service)
- negligent misrepresentation (a statement about a product or service made without investigating its truth)
- fraudulent concealment (suppression of the truth) or,
- a false promise (a promise with no intention to perform), or any other act designed to deceive.
If you make certain types of purchases under certain conditions, you may have a "cooling-off" period under federal law or state law during which you can cancel the contract or sale.
Failure to Perform
Sometimes, a breach of contract suit results not from a refusal to pay a bill, but because one party claims that the other failed to carry out one or more of the terms of a contract. Such would be the case if:
- A tenant sued an apartment owner who agreed to rent the person an apartment but instead rented it to someone else.
- A small business sued a caterer who showed up four hours late with the food and drink for an important party.
- A customer sued a tattoo artist who began an elaborate skull pattern on his back but couldn't find the time or inspiration to finish it–leaving the customer with what looked like a lumpy potato tattoo and the prospect of paying someone else to finish or remove it.
- A freelance writer hired to write an annual report sued the business involved when it failed to provide essential financial information, making it impossible to do the job.
In court, you'll need to convince the judge that the contract existed. If the contract is in writing, bring it to court. If it's oral, be prepared to prove its existence through witnesses and circumstantial evidence. Be creative–if you lent money to a debtor using a check, bring a copy. Along with your own testimony that the borrower promised to repay you, this should be all you need to establish the existence of a contract.
Damages resulting from a breach of contract are normally not difficult to prove. After you show that the contract existed and that the other party failed to meet its terms, you should testify as to the dollar amount of damages you have suffered as a result. And when appropriate, you'll also need to introduce evidence to convince the judge that you really did lose this amount.