It is hard to find comprehensive data on legal actions across multiple jurisdictions. That said, aggregate data from 2005 makes it clear that contract disputes rank near the top of business owners’ legal concerns.
In 2008, the Bureau of Justice Statistics (BJS) reported its findings from a survey of the 26,950 civil cases that made their way to bench and jury trials. Additionally, the BJS noted that these trials accounted for only a small fraction of all the year’s civil actions. In the jurisdictions that provided both trial and non-trial data to the BJS, only 3% of all cases proceeded to trial. One-third of these trials (33%) were for contract disputes.
Business Owners Want to Understand Their Options
The data from 2005 is old, of course, but it still presents a reasonable picture:
- Approximately 61% of all civil trials start from torts, cases in which one party’s actions directly harmed another
- Property disputes, including real estate, accounted for 6% of the cases that went to trial
- The remaining 33% started when one party accused another of breaching a contract
The takeaway, here, is that you shouldn’t be too surprised to find yourself someday pursuing or defending a breach of contract claim. Either way, you will benefit from entering the process with reasonable expectations.
To that end, the BJS report included several other notable statistics:
- 11% of all civil trials involved sellers seeking payment for goods or services
- Buyers sought to have their money returned in 10% of all civil trials
- Businesses were far more likely (64%) to seek bench trials, with a judge and no jury, than the litigants in tort cases 10%)
- Plaintiffs won over two-thirds of all bench trials (68%)
- By comparison, plaintiffs won only 54% of jury trials
- The median final awards in contract cases were nearly three times higher after jury trials than bench trials
- One side or the other filed an appeal after roughly 1 in 5 trials
If these numbers say anything, it’s that there’s more to the idea of business litigation than simply building a strong case. If you take your case to trial, there are significant differences between bench and jury trials. And it is important to remember that 97% of the cases in 2005 settled outside of court, likely for good reason.
Addressing Breaches of Contract
In general terms, breaches of contract start when one side fails to live up to its contractual obligations. The failure is not enough to trigger a breach of contract claim by itself. Instead, the breach must cause real damages. Typically, this means the breach causes the victim to lose money. The victim can then claim the lost money as damages.
Furthermore, there are different flavors of breaches of contract:
- Material breaches involve failures to deliver or provide the goods or services listed in the contract
- Minor breaches involve failures to meet a contract’s deadlines
- Actual breaches have already taken place
- Anticipatory breaches happen when one side notifies the other in advance of its inability to fulfill its contractual obligations
Regardless of how someone breaches a contract, the terms of the contract are typically the focus of any dispute. Accordingly, you need to make sure you understand them clearly, along with any tangential legal implications.
Additionally, you should make sure you understand your goals in the dispute. These goals can change dramatically with the amount of money involved and your relationship with the other party. You’ll likely want to pursue different strategies for small disputes with longtime associates than you would for large disputes with parties with whom you have no meaningful relationship.
Avoiding Lengthy Litigation
Ultimately, you are generally better off spending your time running your business than dealing with business litigation. You want to make sure your contracts are clear and enforceable. You may also want to include clauses that anticipate any breaches, potentially directing them to arbitration. It may also be possible to resolve some breaches between the parties involved, sometimes with attorneys, without ever involving the courts.
When it is necessary for you to join in litigation, either as a plaintiff or as a defendant, you may still have options outside of trial. Motions to dismiss, carefully crafted demand letters and other tactics may set your case on a fast track. The faster you get out of litigation, the sooner you can get back to work.