Breach
of Contract"Punitive damages may be available if the
breach is accompanied by fraud or misrepresentation." The
definition of a breach of contract is a failure to perform any term of a contract,
written or oral, without a valid legal reason. Contracts are legally enforceable
agreements and must be upheld. They are governed by state statutory and common
law. These laws ensure that written—and in some cases, oral—contracts
are fulfilled as specified or implied in the contract. If one side fails to stick
to its part of the bargain, there is a breach. It can include damaged property,
substantial financial loss, or a missed deadline. State
laws vary on what types of damages can be claimed for breach of contract to be
upheld. For example, there are some states that allow recovery for loss of profits
for a new business, while other states require some track record before those
damages can be claimed. And some states have laws allowing for double or triple
damages in certain types of cases. Punitive damages may be available if the breach
is accompanied by fraud or misrepresentation.
Types Of Breach Of Contract
- Corporation
orders a product to certain specs, and then for one reason or another doesn’t
accept delivery. Or accepts delivery and doesn’t pay.
- Corporation
interferes with another corporation’s business, e.g., buys many items but
wrongfully obtains a customer list.
- Former employee
starts a new business and disparages old firm.
- Interpretation
of an oral or written agreement.
- Mistakes made on
the part of the agent or person writing the contract.
- False
and misleading statements.
CASE
OVERVIEW: Breach of Oral Contract Heritage Propane Partners,
based in Tulsa, OK, sued SCANA, South Carolina’s largest utility company
in 2003, in a contract dispute arising over the bidding process and ultimate sale
of SCANA’s propane businesses. Heritage, now
known as Energy Transfer Partners, was approached by SCANA through a SCANA subsidiary,
Cornerstone Ventures, about purchasing five of SCANA’s propane companies.
As part of the solicitation, Heritage and Cornerstone signed a confidentiality
agreement that all information connected with the bid process was to be kept confidential.
After a lengthy and expensive process – Heritage told Cornerstone it wished
to buy the companies and offered an initial bid. After further negotiations, the
two sides came to agreement on all outstanding issues and shook hands. The SCANA
senior management team told Heritage, “we have a deal.” The two sides
continued to work on finalizing the written documents, agreeing that Heritage
would meet with propane employees prior to announcing the agreement publicly.
However, SCANA kept delaying the final contract. It turned out that Heritage had
been used only as a “stalking horse” to garner a higher bid from another
buyer. All the time, expense and expertise that Heritage had expended had only
been used to facilitate transactions with a second bidder, enriching the bidder
and SCANA at Heritage’s expense. Breach
of contract, fraud and punitive damages awarded--$48 MILLION
Heritage
filed suit in 2003, in the Court of Common Please of Richland County, SC, against
SCANA, Cornerstone, and Suburban for breach of contract, fraud and conspiracy,
among other things. In the trial, SCANA had argued that it never entered into
a “final definitive agreement” with Heritage because the contract
had not been signed. On Oct. 22, 2004, a jury ruled against SCANA, and Heritage
was awarded $48 million. |
