Measure of Damages in a Breach of Contract Case
How to Sue for Contract Fraud
A contract is a legally binding agreement between two or more parties involving multiple promises to do things each party would otherwise not have to do. When you enter into a contract, you and the other party are going to discuss the facts surrounding the need for the contract. If the other party lies about the facts surrounding the contract and you rely on that lie when you enter into the contract, fraud has taken place. If contract fraud exists, the contract is voidable, although you may have to go to court to have it voided. To do so, hire a qualified lawyer, prepare your lawsuit, file your lawsuit, and go to court.
Hiring a Lawyer
Ask for recommendations.As soon as you suspect that fraud may have played a role in the execution of a contract between you and another party, you should contact a lawyer for advice. Even if you do not end up hiring a lawyer, they may be able to tell you whether fraud may have been at play. Start your lawyer search by asking friends and family for recommendations. Lawyers are usually people involved with the community and because of that many people often know one.
- When you ask for recommendations, start by asking for any type of lawyer your friends and family may know. Even if they only know a criminal defense lawyer, get their name.
- Once you receive the names of some general lawyers, call them and ask if they have any friends that handle contract disputes. Most lawyers will be able to put you in touch with another lawyer specializing in the area of the law you need help.
Visit your state bar website.If you cannot get any good recommendations from family and friends, visit your state bar's website and locate their lawyer referral service. Using the lawyer referral service, you will be put in contact with someone who will ask you some general questions about your legal issue. After you answer those questions, the person will give you the contact information of multiple qualified lawyers in your area.
- Be as specific as possible when discussing your legal issue. For example, if you think fraud is in play, do not simply state you have a contract dispute. Instead, tell the person that you entered into a contract and you think the other person committed fraud. This will help the lawyer referral service find you the best help possible.
Search for low-cost options.Hiring a lawyer can be an expensive proposition. If you cannot afford to hire a lawyer, or are looking for low-cost options, there are multiple places you can look. Consider the following options when conducting your search for a lawyer:
- Attorneys that will take your case on a pro bono basis. When an attorney takes on a case pro bono, it means they are doing it for free. Every state encourages its' attorneys to take a certain number of cases each year on a pro bono basis. While it is not usually a requirement, most attorneys will look for sympathetic clients to help.
- Nonprofit law firms. Some law firms operate on a nonprofit basis and, as such, offer their services for a fee based on the client's income. This is called charging on a "sliding scale." Fees usually range between and 5 an hour, which is well below the industry average in most areas.
- Law school clinics. In order to give law students practical experience being lawyers, most law schools offer clinic programs, which allow students to practice law under the supervision of a practicing lawyer. Check to see if the law school in your area has a contracts clinic you might be able to be a part of.
Use online resources.Once you have a list of qualified candidates, use the internet to research each one. First, visit online review sites like Avvo and lawyers.com. Avvo and lawyers.com are sites specifically tailored to allowing clients and other people to review their lawyers online.Second, visit the lawyer's personal website or the website of the law firm they work for.
- When you look through online reviews, be wary of what you are reading. While they can offer some good insight, disgruntled clients can often make claims that aren't true or blow things out of proportion. In addition, other lawyers may have friends and family write positive reviews in order to boost their ratings.
- When you look at a lawyer's website, it should be clean, easy to navigate, and updated. Be wary of lawyers who do not have a website or have a website that is outdated. You want a lawyer who can stay up-to-date on things, including their website.
Check each candidate's history of discipline.Before interviewing candidates, check each lawyer's history of discipline. Lawyers are required to act in accordance with certain rules of professional conduct. If a lawyer breaks those rules, they can be sanctioned by their state bar. For example, a lawyer who lies or steals money may be suspended or even disbarred.
- To check, visit your state bar's website and search for the attorney using their name or bar number. When you find the lawyer's bar profile there will be a section on their disciplinary history.
- Never hire a lawyer with a history of discipline if you can help it.
Conduct initial consultations.After doing your background search, it is time to call each candidate and set up an in-person meeting. These meetings, called initial consultations, give you a chance to ask questions of the lawyer so you can get an idea of how they would fit in with your case. Be sure to ask if the meeting is free or if you will be charged. Each attorney handles these meetings differently. Before attending the initial consultation, write out a series of questions to ask the attorney.Some examples of common questions include:
- How many years has the attorney been practicing contract law?
- How many cases similar to yours has he or she seen?
- What is his or her rate of success?
- Does the attorney have good working relationships with local courts and other attorneys?
- What are your particular chances of success based on the information you gave them about your case?
- Does the attorney go to court?
- Does the lawyer have a team helping or will the entire matter be handled personally by the one lawyer?
Discuss fees.Before you leave your initial consultation, you need to ask each lawyer how much they cost.Lawyers can charge for their services in various ways depending on the work that needs to be done and what type of case it is. Common fee arrangements include:
- Time billing, which is when a lawyer charges you based on the amount of time they spend working on your case. This is commonly in the form of an hourly fee that can range from 5 per hour to more than 0 per hour. This is the most common fee arrangement.
- Contingent fees, which is an arrangement based on the success of your case. A lawyer using this fee arrangement will not charge you anything upfront but will take a percentage of any award you get at court. The percentage a lawyer will take can range from around 30% to 60% depending on the work that needs to be done.
- Flat rates, which are fees charged for certain services. If a lawyer uses this type of fee arrangement, you and the lawyer will agree on a final price at the outset. For example, you may have to pay 0 for the lawyer to review the contract. The lawyer may then charge ,000 to file a lawsuit and maybe another ,500 if the matter goes to trial.
Choose the best lawyer available.After interviewing and researching all of your choices, choose the attorney that makes you feel the most comfortable and confident. When you make your choice, contact the lawyer as soon as possible. If the lawyer will take your case, make sure you get the representation agreement, including the fee arrangement, in writing.
Preparing Your Lawsuit
Analyze the facts surrounding the execution of the contract.Contract fraud exists when (1) there has been an untrue assertion of fact, (2) the assertion was made knowing it was false and the other party intended to deceive you by saying it, (3) you relied on the false assertion, (4) the reliance was justifiable, and (5) you suffered some economic loss. Look back at the negotiations surrounding the execution of your contract to determine if fraud existed.
- An untrue assertion of fact exists if someone lies to you, conceals the truth, or doesn't disclose the truth. For example, if you are buying a home and the home owner tells you there is no hole in the roof when there actually is, an untrue assertion of fact has been made.
- In order to constitute fraud, the other party to your contract must have made the false statement knowing it was false and with the intent to deceive you. For example, it would not be fraud if the other party told you there was no hole in the roof when the other party did not know of the hole when they told you. On the other hand, if the other party knew there was a hole in the roof and told you there wasn't for the sole purpose of getting you to sign the contract and buy the house, you would meet this portion of the test.
- It is only fraud if the untrue statement was relied on by you. To have this, you must be able to prove that you pursued some course of action because you believed what the other party said. If you did not know the assertion was made, or you knew the assertion was false, there can be no reliance.
- In addition to relying on the untrue statement, your reliance must be justifiable, which means it must be reasonable. Most courts will not find reliance justifiable if the assertion was obviously false or should never have been taken seriously.
- Lastly, if you are trying to recover damages in addition to rescinding the contract, you will have to be able to prove you were economically harmed. Your economic injury must be directly linked to your reliance on the fraudulent statement.
Figure out if you can sue.If you want to bring a lawsuit in court, you have to have standing to sue. In order to have standing, you must be directly affected by the dispute you are suing about. You will usually almost always be able to pass this test if you were the party to a contract and the victim of fraud. In addition to having standing, you must also have the capacity to sue. In order to have the legal capacity to sue, you must be 18 years old or older and cannot have a legal disability (i.e., be mentally incompetent because of illness, age, or infirmity).
Determine whom you will sue.In a contracts case, you will most likely be suing the other party to the contract. For example, if you entered into a contract with the seller of a home, the seller would be the person you would sue. However, things are not always this simple. The person you should sue might end up being a business or some other legal entity.Talk with your lawyer to determine the best course of action.
Check the applicable statute of limitations.Every state has a statute setting time limits for when you can file certain types of cases. These time limits exist to ensure any action brought includes evidence that is fresh, untainted, and available, as well as witnesses that are available while their memories are still fresh in their mind.
- In California, for example, any action for fraud must be commenced within three years of you discovering the fraud.
Keep track of your remedies.Each state has different laws regarding the availability of damages in fraud cases. In every state, if fraud is proved, you can rescind (i.e., cancel) the contract. When a contract is rescinded, anything you gave the other party must be returned to you. You must also return anything you received from the other party. In essence, it is as if the contract was never entered into.
- In some states, you will have to choose whether to rescind the contract or sue for damages (i.e., you cannot have both). Damages might include, among other things, punitive damages meant to punish the other party.
- In other states, you may be able to rescind the contract and sue for damages. Every state will allow this if your contract involved the sale of goods.
Filing Your Lawsuit
Decide where to file your case.Every court has limits to the types of cases it can hear and decide. A court must have jurisdiction over the person and the subject matter in order to hear your case. Contract law is a creature of state law (i.e., there are very few federal contract laws) and therefore you will always file contract fraud cases in state court. However, there are multiple state courts and you still have to determine which one you can sue in.
- The best way to prove personal jurisdiction is to sue in the state where the other party lives or does business.
- Subject matter jurisdiction in state courts can usually be broken down into three categories. Some state courts can only hear certain types of cases (e.g., bankruptcy courts) and contract claims will rarely end up in these courts. Some state courts have limited jurisdiction and have restrictions on the cases they can take. An example of a court of limited jurisdiction is small claims court, which can only hear cases with small amounts in controversy. Most cases, including contract cases, will end up in courts of general jurisdiction, which can hear and decide a wide range of cases.
- In addition to jurisdiction, you must also choose the best venue to file in. Generally, the correct venue will be a state court in the county where the other party lives or does business, or where the dispute arose (i.e., where the contract was entered into).
Draft your complaint.A complaint is a legal document that starts a lawsuit. The complaint will contain a caption with the court's name as well as the names of all the parties. You will then list, in numbered paragraphs:
- An introduction, which will name the parties and give a factual description of the dispute.
- A statement of jurisdiction, which tells the court why it has personal as well as subject matter jurisdiction. You will also tell the court why it is the proper venue.
- A list of alleged violations, which will tell the court what laws were broken. In your case, you will explain your state's fraud statute and tell the court why the other party committed fraud. Be sure you cite to the statute if possible.
- A prayer for relief, which asks the court to reward you damages.
Fill out your summons.A summons is a legal form informing the defendant that they have been sued and requests their response to the lawsuit. A summons does not usually need to be created and you can simply download a copy from the internet or pick one up from your court. All you will need to do is get a copy of the correct summons and fill in the defendant's name.
Obtain a civil case cover sheet.A lot of state courts also require that you fill out a civil cover sheet to include with your lawsuit. A civil cover sheet helps the court categorize your case. First, find a copy of your state's cover sheet by visiting the court's website or by visiting the court in person. Next, fill out the form by including the following information:
- Each party's name and the name of the court.
- A check mark next to how much money you are asking for.
- A check mark next to the description of your case. In the case of contract fraud, you would check the box for "contracts" or "contractual fraud" depending on what is available on your form.
- A check mark next to the type of damages you are seeking (i.e., monetary, non-monetary, and/or punitive).
- Your signature.
File your papers.When you have completed your complaint, summons, and cover sheet, make at least three copies and bring everything to your court. If you file in-person, the clerk of courts will gather your documents and make sure everything has been filled out correctly. Once the clerk approves your paperwork, you will have to pay a filing fee. Filing fees vary in every state and even in different counties. Generally they range from 0 to 0 depending on where you live and what type of case you are filing.
- Once you file your case, the clerk will stamp "filed" on all of your paperwork. The court will keep the original and give you your copies back. One copy will be served on the defendant and you should keep the other copies for your own records.
Serve the defendant.Once you file your lawsuit, you must give legal notice to the defendant. You do this by serving the other party with a copy of your complaint and summons. To serve the other party, you will need to have someone over the age of 18, who is unrelated to the case, hand or mail your lawsuit to the defendant. You can also hire the sheriff's office to serve someone for a small fee.
- Once service has been completed, the server will return a proof of service form to you. This form is signed by the server and states that he or she validly served the other party. You will file this return with the court. The court cannot make any decisions about your case until it receives these notices.
Await the defendant's answer.Once the defendant is served, he or she will have a certain amount of time to respond to your lawsuit. In general, the defendant will have 30 days from the time they are served. The defendant will usually respond by filing an answer with the court and serving it on you. An answer responds to each of your allegations by either admitting or denying them. In addition, the defendant may file counter-complaints if he or she believes you have done something against the law.
- Read the answer carefully as it will give you a good idea of how the defendant is planning on fighting your case. Talk to your attorney about how to move forward.
Taking Part in Pretrial Actions
Conduct discovery.One of the first stages of litigation after your lawsuit has been answered is discovery. During discovery, you and the other party will exchange information about the case in order to prepare for trial. You will be able to talk with witnesses, collect facts, see what the other side is going to say, and see how good each party's case is. In order to achieve these goals, you can use the following tools:
- Informal discovery, which involves conducting interviews, gathering publicly available documents, and taking photographs.
- Depositions, which are in-person interviews with a party or witness conducted under oath. The answers given during a deposition can be used in court.
- Interrogatories, which are written questions that another party or witness is required to answer. These questions are answered under oath and can be used in court.
- Requests for documents, which are formal requests sent to the defendant asking for documents not otherwise available. Examples might include text messages, emails, or internal memos.
- Subpoenas, which are court orders requiring someone to do something.
Defend against a motion for summary judgment.As soon as the discovery phase concludes, the defendant will likely file a motion for summary judgment. If successful, the litigation would end and the court would rule in the defendant's favor. To succeed, the defendant will have to persuade the court that there are no genuine issues of material fact and that they are entitled to judgment as a matter of law. In other words, the defendant will have to prove that, even if the judge made every factual assumption in your favor, there is still no way you could win.
- You can defend against this motion by filing affidavits and evidence persuading the court that there are disputed issues that need to be resolved at trial. If you succeed in your defense, the litigation will continue.
Attempt to settle.Before you go to trial, you may want to consider settling in order to avoid the added costs and time consumption of a trial. Start by sitting down with the other party informally and discuss your views and what you would accept to end the litigation. Listen to what the defendant has to say and try to find common ground. If an agreement cannot be reached, consider trying these other alternative dispute resolution methods:
- Mediation, which involves hiring a neutral third party to sit with both parties to try and find areas of agreement. The mediator will not take sides and will not voice opinions. He or she is simply there to help move discussions forward.
- Arbitration, which involves hiring a judge-like third party to review the case. The arbitrator will listen to each party's case and will then take a side and voice opinions.
Attend the final pretrial hearing.If a settlement cannot be reached, you and the other party will attend one final pretrial hearing before the trial begins. During this hearing, both parties will sit down with the judge and lay out the issues that need to be handled at trial. The judge will then make a road-map for the trial, which will include the issues to be tried.
- You need to make sure you bring every issue to the table during this hearing. If you neglect to bring something up, you may not be able to discuss it at trial.
Going to Trial
Choose a jury.If you chose to exercise your right to a jury in your complaint, you will choose your jury now. The process of choosing a jury is called "voire dire" and involves you and the defendant asking questions of potential jurors. Your questions should try to gauge the honesty and biases of the potential jurors. If you think a juror is biased, you can ask the court to remove them from the juror pool.
- At the end of this process, a jury will be empaneled and the trial will begin.
- If you waived your right to a jury, the judge will make all of the factual decisions about your case.
Make an opening statement.When the trial begins, you will make an opening statement to the court about how the case will proceed. Your statement should be short and succinct and it should tell the court exactly what you are going to prove. Do not offer any evidence at this point and do not discuss any details.
- After you make your opening statement, the defendant will have an opportunity to do the same. In some circumstances, the defendant may choose to hold their opening remarks until after you have presented your case.
Present your case.Since you are the plaintiff, you will present your case first. To present your case, you will call witnesses to the stand and present evidence through them. Evidence can be in the form of testimony or exhibits. In order to be admitted by the court, all of your evidence must comply with the local rules of evidence in your court. Be sure you are familiar with these rules so your case can be presented smoothly and accurately.
- After you ask questions of each witness, the defendant will have an opportunity to cross-examine them.
Cross-examine witnesses.After you rest and finish presenting your case, the defendant will present his or her case. After each witness is questioned by the defendant, you will have an opportunity to cross-examine them. When you cross-examine a witness, you will try to poke holes in their testimony and reveal their biases.
- For example, if a witness, during direct examination, claims that they never told you there was a hole in the roof, but during a deposition that same person said they did tell you about the roof, you should bring that inconsistency up.
Give your closing argument.When both parties have rested, you will have an opportunity to make one final plea to the court. During your closing argument, you will want to tie the entire trial together and paint a clear picture for the court. You should highlight the most persuasive parts of the trial and tell the court why you should win.
- The defendant will have an opportunity to make a closing argument once yours is done.
Await the verdict.When the trial concludes, the fact-finder (i.e., the jury or judge) will take some time to deliberate and make a decision. When the fact-finder comes to a conclusion, they will announce that verdict in court. If you win, you will be awarded damages. If you lose, the defendant will not owe you anything.
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