Chicago-Contract-Disputes-attorneyContract Disputes in Chicago

In Illinois, contract disputes most often arise in the commercial litigation context.  Commonly, individuals, professionals and businesses enter contractual relations with honest and good intentions.  But still, these business agreements can end up being the center of a business dispute and often lead to contract litigation, in which our Chicago business litigation lawyers regularly handle. When contract disputes arise between businesses and/or individuals, it is usually due to one or both parties’ failing to perform under the contract.  When this happens, large amounts of money and/or the financial health of a business may be at stake. What ensues can be contentious contract litigation over the terms of the contract, each party’s rights and duties, and the remedies available.

A party can breach a contract in Illinois in a number of ways. Generally, a contract litigation occurs when one party fails to perform his or her obligations under the terms of the contract, including but not limited to failing to pay pursuant to the terms of the contract, failing to perform certain services or tasks pursuant to the terms of the contract, failing to timely perform pursuant to the contract, among others.  Other specific examples of contract disputes that occur in Illinois are failure to deliver goods, failure to pay for goods or services, failure to pay a promissory note or debt, failure to pay a personal guarantee, failure to comply with employment agreements and/or restrictive covenants (non-compete agreements and non-solicitation agreements), and failure to comply with a settlement agreement.

Oftentimes business contract litigation arises due to a disagreement in interpretation of the terms of the contract. One party might read a provision of a contract to mean one thing and another party might read it to mean another.  It is not uncommon for a party to try to take advantage of ambiguous terms or “ambiguities” in a contract or certain provisions of an agreement.  Other times the contractual claims can be due to unilateral or mutual mistakes.

An individual, professional or business in Illinois may become involved in a contract dispute due to a variety of reasons. Generally, contract litigation occurs when one party fails to perform on time, does not perform in accordance with the terms of the agreement, or does not perform at all. Our contract litigation attorneys handle a broad range of contract disputes throughout Chicago, Illinois.

Elements to Consider in a Contract Dispute

There are four elements to a breach of contract claim under Illinois law: (1) a valid and enforceable contract; (2) performance under the contract by plaintiff; (3) breach by the defendant; and (4) injury / damage to the plaintiff.

Contract Disputes Relating to Ambiguous Agreements

The terms of a contract are oftentimes vague, confusing and ambiguous.  Ambiguous and unclear terms or provisions in a contract can often lead to serious misunderstandings and conflict and can also lead to a lawsuit involving the terms of the contract.  A contract is typically construed in a light most favorable to the non-drafting party.  In other words, ambiguous terms or provisions will be most often construed against the drafting party.  It is important when drafting and/or negotiating the terms of a contract to draft the contract so that the terms are clear and unambiguous to avoid an eventual contractual dispute that could lead to contract litigation.  It should also be noted that when dealing with ambiguous contracts, the courts have a lot of discretion in interpreting the ambiguous terms and provisions, so it can be difficult to predict how the court will rule.

Contract Disputes Relating to Mutual Mistake

A mutual mistake occurs when the parties to a contract did not understand one another when entering into the contract.  Oftentimes, mutual mistake can render a contract void.  Or in some instances, only specific provisions of the contract will be rendered void.  The mistake must have been at the time the agreement was entered.  Does the mistake go against the basic assumption of the contract?  Does the mistake have a material effect on the performance under the contract?  Did either party assume the risk of mistake when entering the agreement?  Each of these questions should be considered when mutual mistake is a possibility.

An individual, professional or business can breach a contract in a number of ways. Generally, a contract disagreement occurs when one party fails to perform on time, does not perform in accordance with the terms of the agreement, or does not perform at all. Our Chicago contract lawyers handle a broad range of contract disputes, which may be settled or litigated in or outside the courtroom.

Contract Disputes Relating to Oral Agreements

Oral or verbal contracts are enforceable in Illinois (and no, a handshake is not required for them to be legally binding).  If the terms of the contract were agreed to by the parties, and particularly if one or both parties performed (or partially performed), then the agreement will likely be enforceable.

Even if the agreement between the parties is not clear, as long as one party performed or accepted services, the party benefitting from the performance should be expected to compensate the performing party.

Although verbal contracts are just as valid as written contracts in Illinois, they are more difficult to prove.  Performance by one party, however, can make an oral contract easier to prove.  It is best to put a contract in writing, but a valid breach of contract claim may exist without a written agreement.

Statute of Frauds in the Contract Dispute Context

Although oral contracts are enforceable in Illinois, certain exceptions apply.  For example, the Statute of Frauds (SOF) governs which types of contracts must be in writing, rather than verbal. There are five categories of contracts governed by the Statute of Frauds:

  • (1) Contracts involving the sale of an interest in land;
  • (2) contracts the performance of which extends beyond one year;
  • (3) contracts in which someone assumes responsibility for someone else’s debt; that is, promises to be a surety;
  • (4) promises the consideration for which is getting married;
  • (5) contracts for the sale of goods worth more than $500;
  • (6) Certain promises by executors and administrators

Common Defenses to Contract Dispute Claims

Defenses to contract dispute claims may include, but are not limited to: Laches, unconscionability, estoppel, statute of frauds, mutual mistake, duress, undue influence, fraud, no privity and statute of limitations, among others.

A plaintiff in a contract dispute, or in any business litigation, must be mindful that time limitations apply to the filing of contract dispute actions and other business litigation and commercial litigation actions.  These limitations are different depending on whether the contract is oral or in writing.  A defendant in a breach of contract dispute will also want to be mindful of these time limitations or “statute of limitations” to potentially use as a defense to the contract breach or other business litigation claims.

Contract Dispute Remedies

The most common remedies for contract violations are (1) damages, (2) specific performance and (3) restitution or cancellation.  Damages can be broken down into three categories:  direct, incidental and consequential.  Direct damages can be viewed as “benefit of the bargain” damages (i.e. what you would have been paid under a contract had the other party performed).  Incidental damages are damages incurred in attempting to “mitigate” the effect of another party’s breach.  Consequential damages not directly caused by the breaching party, but that should be foreseen by the breaching party.  Lost profits are often viewed as a form of consequential damages.

Clients often ask if punitive damages are available as damages for breach of contract in Illinois.  Punitive damages are generally not available in Illinois for breach of contract.  However, under circumstances where the breach amounts to an independent tort, done with malice, wantonness or oppression, punitive damages may be available.

 Attorney’s Fees Provisions in Contract Disputes

Illinois follows the “American Rule” with respect to attorney’s fees.  The American Rule provides that each party is responsible for his own attorney’s fees.  The contract must provide for attorney’s fees for the non-breaching or prevailing party.  If it does not, a party will generally not be entitled to attorney’s fees unless the fees are recoverable under an applicable statute.

Call Our Chicago Corporate Litigation Lawyers

Our Chicago attorneys have significant experience in handling a wide range of contract disputes in a diverse number of business industries. To schedule a consultation with one of our corporate litigation lawyers today, please contact us online or give us a call at 312-789-5676.