Contracts are an extremely important aspect of California business and are generally very present in almost every aspect of a company. Contracts are commonly used during business formation, such as the duties that one party accepts and the responsibilities that are also accepted for consideration. This seems fairly standard — until one party does not meet its contractual duty. When this happens, the party who is injured by the failure of the completion of a contractual duty may have a breach of contract claim.

Breach of contract claims are common in California and are generally decided by a local court or through negotiation. A lawsuit claiming a breach of contract was recently filed against a California company. The lawsuit claims the California company breached its contract when it terminated the agreement between the parties. The lawsuit claims the contract was breached because the termination did not comply with the six-month notice requirement that existed in the contract.

Pursuant to the contract, the California company provided engineers who worked for the other party. During the contractual period, the California company was acquired by another company. The California company gave notice to the other party that its services of providing engineers would stop upon the acquisition. This notice provided a 30-day timeframe, instead of the contractual agreement of a six-month notice.

The injured party, who was relying on the engineering services, claims it lost almost $200,000 due to the breach of the six-month notice contractual requirement. If the presiding court determines there was a breach of contract, the California company could be liable for damages.

Source: The Business Journal, “Rockwell Automation sues California company in contract dispute,” Jeff Engel, Sept. 24, 2012