Breach of Contract in North Dakota: What You Need to Know Before You Sue (or Get Sued)
Contributor: Lee Grossman
Here in North Dakota, we expect that people will honor their word and perform what they promised. A deal is a deal . . . until it isn’t. A breach of contract happens when someone fails to perform a contractual duty when it is due.
What Is a Breach of Contract?
A breach of contract is the nonperformance of a contractual duty when it is due. To win a breach of contract claim in North Dakota, the party bringing the lawsuit must prove: (1) a valid contract exists, (2) the other party breached it, and (3) damages suffered as a result of the breach. WFND, LLC v. Fargo Marc, LLC, 2007 ND 67, 730 N.W.2d 841.
Each element matters. If there is no valid contract, there can be no breach of a contract. If there are no damages as a result of a breach of contract, there is no remedy to recover from the court. The obligations owed by each party matter, too. Written contracts identify which party is responsible for which obligation, and in what order. But verbal agreements are also contracts that can be enforced if promises are broken.
How Long Do I Have to Sue for a Breach of Contract?
In most cases, the statute of limitations to commence an action for breach of contract is six years. The clock starts when the action is “commenced.” In North Dakota state court, an action is commenced by the service of a summons. In North Dakota federal court, an action is commenced by filing a complaint with the court. It is important to know where you are filing the lawsuit to know your deadline to commence the action before the statute of limitations runs out.
There are, of course, exceptions. If the dispute involves the sale of goods, the Uniform Commercial Code shortens the statute of limitations to four years. If the contract is contained in an instrument affecting title to real property, the statute of limitations can stretch to ten years.
What Damages Can Be Recovered for Breach of Contract?
North Dakota’s measure of contract damages is meant to compensate the injured party for all the detriment proximately caused by the breaching party, or which would be likely to result from it in the ordinary course of things. In non-lawyer words, contract damages are designed to put the innocent party back in a place it would have been had the other party simply performed its contractual obligations. The damages finish the benefit of the bargain.
What those damages look like completely depend on the deal that was made. If a supplier fails to deliver products, the damages may be the extra cost of buying replacement goods elsewhere. In construction cases, the damages may be the cost to repair defective work, or the cost to build or rebuild the work that was never performed.
The innocent party cannot, however, just sit on its hands and wait for the money train to roll by. The innocent party still has a duty to mitigate its damages – reasonably reducing the damages that the breaching party would have to pay. For instance, if a siding contractor improperly installed siding on a building that would cause water damage, the building owner has a duty to replace the defective siding with properly installed siding to avoid further damage to the building caused by potential water damage.
I Have Damages! When Do I Get My Money?
Winning a judgment and collecting on a judgment are two different things. You may (or may not) be entitled to attorney’s fees. You may be entitled to prejudgment interest. You may be entitled to post-judgment interest. Your damages may be capped by the terms of the contract.
All of this to say that the recoverable damages significantly depend on the terms of the contract, the statutes in place where the contract is silent, and the statutes in place where the contractual terms are likely unenforceable. Diving headlong into litigation for breach of contract, without knowing what damages you can actually recover, may result in the party who brought the lawsuit paying more in attorney’s fees than they actually recover from the breaching party.
What Should You Do If You’re Dealing with a Breach?
Documents, documents, documents. Paperwork, both the folding and digital kinds, are key pieces of evidence. So too are letters, emails, text messages, voicemails, and other forms of electronic communication. Resist the urge to fire off an angry email because there’s a good chance that email will become an exhibit at trial.
And, if possible, keep performing your contractual obligations. This helps mitigate potential damages and shows good faith to keep honoring the terms of the contract even when the other side breaches.
Talk to an attorney as soon as possible. You may have options available to avoid a costly lawsuit. Or you may be obligated to mediate the dispute or take the dispute to arbitration before commencing a lawsuit with the court. The options available, from the cost of the lawsuit to the likelihood of recovery, will go a long way to determine whether or not the breach is even worth the litigation.
Conclusion
Breach of contract cases in North Dakota have three simple elements, but the technicalities, deadlines, and recovery that come with these elements are not so simple. If you are involved in a breach of contract situation, the commercial litigation team at SW&L Attorneys can help.
