Contract Enforcement and Retention

Contract enforcement is an unfortunately necessary focus when entering into business.

 

What is a Contract?

A contract is a written or oral agreement between two or more persons or entities to exchange consideration. You can learn more about contracts in our earlier blog.

 

What Does Contract Enforcement Look Like?

There is a wide variety of ways to enforce contracts. If you haven’t specified one in your contract, you will use the courts. You can pick an alternative dispute resolution (ADR) method through a provision in your agreement. In court, you first must determine what courts have jurisdiction and which venue is appropriate. After that, you must also determine what state’s laws apply. Then you have the lawsuit, which includes many steps to obtain a final judgment.

 

Requirements for Contract Enforcement

In order to enforce your contract, you must first have a valid contract. Fortunately, even if yours isn’t valid, you may be able to obtain a judgment based on another area of law like quasi-contract, promissory estoppel, or quantum meruit. A valid contract can be either oral or written. What you need is proof. A signed copy is the best proof. Then you have to show that the opposing party breached the contract. After that, you may be asked to show that you didn’t breach first, greater, or in some substantial way. It all depends on what the opposing party argues.

 

Retention

You should be keeping your contracts for at least three years after you finish the work. Additionally, you should keep them in a safe, organized, place where you can easily access them. Under North Carolina law, you’re required to present the “best evidence.” For contracts, this means you should be able to present the original contract when you want to enforce it. A copy may or may not suffice depending on the circumstances. You should also definitely make electronic backups of all your contracts. If you lose the original, it is better to have a copy than none at all. You will likely lose your case if you cannot show even a copy of the contract.

 

Statute of Limitations

You will also have to show that your claim is not past the statute of limitations. Typically, in North Carolina, contracts have a three-year statute of limitations from the date of first breach. However, being the law, there are many exceptions to this rule!

 

Unclean Hands

In certain circumstances, such as seeking specific performance as a remedy, you will have to show that you do not have “unclean hands.” This means that your bad action was bad enough that it should preclude you from recovering in this action. Unclean hands is an affirmative defense to a lawsuit.

 

Liens

Sometimes, you have the ability to file a lien against the breaching party. Contractors and mechanics have access to this protection. Although there’s a shorter period of time to file the lien, these professionals have the ability to attach a lien to real estate or a vehicle that they worked on. This incentivizes prompt payment and ensures the workman gets paid. In order to obtain a lien, this person will have to be very organized and prompt. Typically, these are registered with the courts’ special proceedings office. After obtaining a lien, if the person still doesn’t pay, the lienor can have the sheriff auction off whatever property is subject to the lien. This is a huge advantage, so if you have the ability to file liens, you absolutely should!

 

In conclusion, contract enforcement is not an easy battle, but if you do it correctly, you can make it more manageable.

 

If you need help enforcing a contract or modifying your contract practices, feel free to contact us using the form below. Additionally, we can be reached by emailing info@lawplusplus.com or by calling 919-912-9640.

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