What Evidence is Admissible in a Contract Dispute?
We’ve all heard the saying “the best-laid plans of mice and men,” and that certainly applies when it comes to business agreements and contracts. Partners may start out thinking they have a mutually beneficial pact with clear-cut goals and responsibilities, only to find later that their “meeting of the minds” wasn’t as clear-cut as they thought. Disputes can arise, and one party may feel harmed more than the other. Afterward, legal battles ensue.
If you’re facing a dispute and considering legal action, or the other party is considering taking you to court, you no doubt want to know what you can expect to face. What kind of evidence is needed to win a contract dispute battle? What are your odds of prevailing?
William B. Hanley, Attorney at Law has forty years of experience in handling contract disputes for clients in Irvine, California, and throughout the counties of Orange, Los Angeles, and San Diego. He will meet with you, discuss the circumstances of your business dispute, and present your options, including the requirements and challenges of a lawsuit.
The Nature of Contracts
Contracts can be in writing, agreed to orally, or even created through the repeated actions of two parties, which is called an implied contract. Regardless of its form, a contract generally must have five elements to be valid:
An offer
Acceptance
Consideration
Mutuality of obligation
Competency and capacity
Business A needs 200 drones supplied each week and calls on Business B to supply them. When B agrees, you have both the offer and acceptance. Then consideration becomes a factor. Business A promises to pay Business B a certain number of dollars for the drones. The mutuality of obligation means A must pay B for the drones upon delivery or within a set amount of time, while B must supply the drones. Finally, both the principals of A and B must be 18 years of age or older and of sound mind and not under the influence of any substances when the agreement is reached.
Given the above, you can sense that a written contract is going to be much easier to prove legitimate in court. An oral or implied contract will depend upon what each party says and remembers — which can be much harder to prove.
Common Contract Disputes
The most common type of contract dispute is a breach of contract. In the above example, if Business B doesn’t deliver the drones on time, or if Business A refuses to pay for them when they are delivered on time, there is a harmed party and a breach of contract. Other forms of contract disputes, which are often just variations of a breach, include:
Commercial Leases
This can involve nonpayment or partial payment of rents, or an unlawful detainer, which is a demand for up to 12 months in rent if the lessee wants to end the arrangement.
Non-Compete Agreements
Employers may demand that their employees sign an agreement not to compete for a specified amount of time after leaving the company, but these are difficult to enforce in California.
Sale of Goods Contracts
Business A agrees to sell a certain quantity of merchandise to Business B but fails to do so, or Business B fails to pay, similar to our example above.
Non-Disclosure Agreements (NDAs)
These agreements are used to protect trade secrets and other sensitive information. For instance, in our example, Business A is using the drones for a proprietary purpose that it doesn’t want others to find out about, so it gets Business B to sign an NDA.
Company Contracts
You sign up for web hosting with a company in that business. This is a company contract. If the hosting company reneges on its promises, that can be a breach.
Material Breaches
These are generally outright refusals to follow the terms of the contractual agreement, such as if Business B in our example just refuses to supply the drones.
Four Types of Evidence
In any legal case, there are four main types of evidence admissible: testimonial, documentary, demonstrative, and real. Here are the definitions relating to contract disputes:
Testimonial: Witnesses who speak on behalf of the plaintiff or defendant. In an oral or implied contract dispute, this could also be the testimony of the parties to the alleged contract.
Documentary: When a document supporting one side or the other is admitted and authenticated by a witness, such as the contract itself.
Demonstrative: This generally refers to physical evidence versus testimonial evidence, for instance, a video recording of an act that led to a breach of contract. The demonstrative evidence must be authenticated.
Real: The contract itself in a business dispute — a “smoking gun” in popular parlance.
Admissibility of Evidence
It’s likely that we’ve all seen courtroom dramatizations in which one attorney will stand up and shout, “Objection! Irrelevant!”
Any type of evidence submitted is subject to the Federal Rules of Evidence, specifically Rule 402, which states: “All relevant evidence is admissible, except as otherwise provided by the Constitution of the United States, by Act of Congress, by these rules, or by other rules prescribed by the Supreme Court pursuant to statutory authority. Evidence which is not relevant is not admissible.”
In order to be relevant, all evidence submitted must be tied as a matter of consequence to the issue at hand. Rule 403 through 405 goes on to list causes for exclusion of relevant evidence based on prejudice and the character of a witness, among other reasons.
The Parol Rule of Evidence
Not to be confused with parole, the parol rule of evidence applies only to written contracts. The parol rule — also called “the outside evidence rule” — prevents the parties to a contract from submitting “extrinsic” evidence.
Specifically, this means the evidence must be based on what is written in the original contract. One party cannot say that, for instance, ‘After we signed the contract, we agreed that the number of drones to be delivered would be 100.” Outside evidence can also be other written agreements, written promises, oral agreements, and discussions prior to finalizing the written contract.
The parol rule, however, applies only when the contract is a “complete integration,” in other words, finalized or “integrated.” There can be no doubt that the parties to the contract believed it to be the final contract.
There are some exceptions to the rule, however. One occurs if a term or passage in the contract is ambiguous or missing. Outside evidence can be used to clarify matters. Another potential exception is to provide evidence of the existence of an integrated collateral agreement. Integrated means a collateral agreement cannot contradict the original contract but must be part and parcel. Finally, parol evidence may be used to demonstrate that a party was fraudulently induced into signing a contract.
Call William B. Hanley, Attorney at Law for Help
As you can see, a lawsuit over a contract dispute can get caught up in various legal complexities ranging from the validity of the contract itself to the admissibility of evidence. These legal complexities can make it difficult to prevail but they also offer the defending party room to challenge the lawsuit.
If you’re on either side of a contract lawsuit, William B. Hanley, Attorney at Law, has decades of experience navigating the courtroom and legal system. Whether you are plaintiff or defendant, he will work with you to devise a strategy aimed at obtaining the best available outcome.
If you’re in Irvine or the California counties of Orange, Los Angeles, and San Diego, rely on William B. Hanley, Attorney at Law, for all business and contract litigation-related matters.