Rhode Island – The basics – Contract Law & Breach of Contract
Generally, any written agreement between two parties that meets certain criteria is a contract. Areas where you normally see contracts formed are between two businesses, a person and a business, in real estate transactions such as where you have a purchase and sale agreement, in a divorce where you likely have a property settlement agreement, and in many other everyday situations.
The starting point in all contract claims is that you must have valid contract with the other party. Then, the other party has to break the contract, or in more legal terms “breach” the contract. When the other side breaks the contract, you must either be performing as promised under the contract, or in some circumstances, you were ready, willing and able to perform when the other side broke the contract. As part of your breach of contract claim, you can ask the court to award you money damages for the other side’s breaking of the contract.
Whether you are in Woonsocket, Providence, Warwick, Newport, or anywhere in between, here are some Rhode Island specific things to keep in mind if you have a potential Rhode Island breach of contract claim:
Rhode Island – Contract – Statute of Limitations. A statute of limitations is the period in which the cause of action, or lawsuit, must be properly commenced. Generally, the Rhode Island contract statute of limitations for breach of contract actions is ten (10) years, with the ten-year period starting to run when the breach of contract occurs. R.I.G.L. § 9-1-13. There is a different statute of limitations for the very limited circumstances of “contracts or liabilities under seal,” and for actions for a court judgment. The contract statute statute of limitations for those very specific circumstances is twenty (20) years. R.I.G.L. § 9-1-17.
Rhode Island – Contract – Elements. You will first have to establish you had a valid contract. The Rhode Island Supreme Court has said that the elements of a valid contract are “competent parties, subject matter, a legal consideration, mutuality of agreement, and mutuality of obligation.” R.I. Five v. Med. Assocs., 668 A.2d 1250, 1253 (R.I. 1996). The Rhode Island Supreme Court has further explained the requirement of a mutuality of obligation as “when both parties are ‘legally bound through the making of reciprocal promises.'” D’Oliveira v. Rare Hosp. Int’l, Inc., 840 A.2d 538, 540-41 (R.I. 2004).
Rhode Island – Contract – Breach. When a party breaks a contract, legally its termed a breach of contract. To bring a Rhode Island claim that the other side broke the contract, or committed a breach of contract, you must show that you were performing as you had promised under the contract when the breach occurred. If you were supposed to perform your contract obligations under the contract at the same time (concurrently) as the party that you are saying broke the contract, the Rhode Island Supreme Court has said that when “concurrent acts are to be performed by the parties to a contract, the party bringing suit for breach need only aver that he or she was ready and willing to perform and that the alleged breacher was requested to perform but refused.” Kottis v. Cerilli, 612 A.2d 661, 663-64 (R.I. 1992). In those circumstances, “It is not necessary that the party alleging the breach actually perform; instead, notice of his or her readiness to perform constitutes and implies tender.” Danforth v. More, Rhode Island Supreme Court, (Jan. 14, 2016).
Rhode Island – Contract – Damages. Under Rhode Island law, a court can award you damages for breach of contract to place you in as a good a position as if the parties fully performed the contract. This would include any lost profits. You must, however, be able to prove your damages with a “reasonable degree of certainty,” based on “reasonably precise figures;” and the damages claimed cannot be based on speculation.
Rhode Island law also requires that you take “reasonable efforts and ordinary care” to lessen (mitigate) your damages. “This rule prevents the injured party from sitting silent while the damages accumulate.” Tomaino v. Concord Oil of Newport, Inc., 709 A.2d 1016, 1026-27 (R.I. 1998). Importantly, this “duty to mitigate does not create liability for failure to do so; however, [you are] prohibited from recovering the amount of damages [you] could have reasonably avoided.” Bibby’s Refrigeration, Heating & Air Conditioning, Inc. v. Salisbury, 603 A.2d 726, 729 (R.I. 1992).
Rhode Island – Implied Contract – Elements. If you don’t have an actual signed contract with the other party, then you still might be able to say that you had an implied contract. Under Rhode Island law, an implied contract “is a form of express contract wherein the elements of the contract are found in and determined from the relations of and the communications between the parties, rather than from a single clearly expressed written document.” Marshall Contractors, Inc. v. Brown Univ., 692 A.2d 665, 669 (R.I. 1997). If you do not have a written contract, but instead have several documents or exchanges with the other person or business, then you should consult with an attorney to see if what you do have adds up to an implied contract.
Rhode Island – Recovering attorney’s fees in certain breach of contract actions. Generally speaking, even if you win in your breach of contract lawsuit, you cannot make the losing party pay for the attorney’s fees that you have spent in your lawsuit. There are certain circumstances, however, where you can make the losing party in your breach of contract claim pay your attorneys fees, as there is a Rhode Island statute that allows for the recovery of those fees. That statute, R.I.G.L. § 9-1-45, says:
The court may award a reasonable attorney’s fee to the prevailing party in any civil action arising from a breach of contract in which the court:
(1) Finds that there was a complete absence of a justiciable issue of either law or fact raised by the losing party; or
(2) Renders a default judgment against the losing party.
If you have a question about a contract, or think someone has broken a contract they had with you, then please call us. We practice in all cities and towns in Rhode Island, from Woonsocket, to Providence, to Warwick, to Newport, and all places in between. Contact us, we can help.