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Breach of Contract Claims: The Foreseeability Standard

BreachContract

Unfortunately, parties do not always follow through with the terms of their commercial agreements. A breach of contract can cause significant financial harm to the non-breaching party. Under Florida law, individuals and businesses can hold a defendant legally liable for damages related to a breach of contract. What damages are recoverable in a breach of contract claim? It depends entirely on the specific circumstances of the case.

Notably, there are some important limitations on damages. Among other things, plaintiffs are generally only entitled to recover damages that were “reasonably foreseeable” at the time of the agreement. In this article, our West Palm Beach business litigation attorneys provide a brief overview of the foreseeability standard.

The Rule: Plaintiffs Can Only Recover ‘Foreseeable’ Damages 

Florida courts will only award contract damages to the extent that they are determined to be reasonably foreseeable to the breaching party at the moment that the agreement was made. To be clear, breaching parties cannot claim ignorance as an excuse to get out of paying contract damages. A loss that occurred as a result of a contract breach that a breaching party knew or should have known was a possibility is a foreseeable damage.

Of course, what is and what is not a “reasonably foreseeable” damage is often up for debate. Similar to other breach of contract claims, cases centered around the foreseeability of damages are highly fact-specific. If you or your company is currently locked in this type of dispute, you need an experienced contract litigation attorney on your side. 

Foreseeability and Disclosure of Relevant Details During Negotiations/Drafting 

No one enters an agreement expecting that it will be violated. That being said, you should always be prepared to deal with a breach of contract. One important thing to consider is the fact that you can dramatically improve your ability to recover financial compensation for your damages by disclosing important information during contract negotiations. Indeed, it is recommended that you take proactive steps to highlight and document the importance of an agreement.

As an example, imagine that a supplier’s failure to deliver certain goods by a certain deadline would trigger a chain reaction event that would almost certainly cost your company major commercial opportunities. If the supplier is not made aware of that detail before the contract is signed, those lost profits may not be deemed a reasonably foreseeable loss. As a result, you may be denied damages to account for them. However, if your company goes into the negotiations clearly explaining the importance of the contract and the scope of the likely resulting damage, that changes the dynamics—it will be far easier to prove that those losses are foreseeable. 

Contact Our Florida Contract Litigation Attorneys Today

At Pike & Lustig, LLP, our West Palm Beach business litigation attorneys have extensive experience handling the full range of breach of contract claims. If you have questions about foreseeability and contract damages, we are here to help. To set up a confidential consultation with a business lawyer, please With a law office in West Palm Beach and an office in Miami, we handle breach of contract lawsuits throughout South Florida.

https://www.turnpikelaw.com/can-you-use-promissory-notes-to-fund-your-business/

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