Table of Contents

• What is an employment agreement?
• What can be done about a breach of the employment agreement?
• How are damages calculated when an employment contract is breached?
• If I breached my contract, or am planning to, what are my defenses?

What is an employment agreement?

An employment agreement or employment contract refers to the ‘terms and conditions’ that you as an employee, or your employee, will operate by. It specifies the nuts and bolts of employment including: Pay rate, hours worked, duties, benefits, termination requirements and more. Once the employment contract is signed by both parties, it is legally binding. A breach of an employment agreement occurs when either party involved fails to uphold the terms and conditions of employment which they signed upon. An example of an employer breaking the agreement would be denying benefits to an employee that they are entitled to and which is stated in the contract. An example of an employee breaking the agreement would be disclosing confidential company information to an outside source.

What can be done about a breach of the employment agreement?

If the employee or employer breaks the terms of the contract in a way not specified in the agreement, then the other party may be entitled to damages and may enforce the agreement through means of court. Before taking legal action, there are precautionary steps you should take if you believe the terms of your agreement have been breached. First, check the agreement to ensure that the contract has actually been breached. Next, approach your employer or employee to discuss the issue with them. The breach may have been unintentionally and may easily be resolved. If this is not the case, it may be time to contact an attorney to determine whether the contract has been breached and specifically which terms have been breached. You may also try mediation or arbitration, “…However, these types of alternative conflict resolution may not be available to you in your employment agreement. It is important that you follow any procedures laid out in the employment agreement”.

How are damages calculated when an employment contract is breached?

As an employee, and if legal action does arise, the type of damages available to you are generally compensatory damages. This means the breaching party must pay the injured party what was promised elsewhere in the contract. An example of this would be if an employee is wrongfully terminated, he or she may be entitled to damages in the form of lost wages. On the other end of the spectrum, if an employee quits without giving the appropriate notice outlined in the employment contract, the employer may also be entitled for damages. These damages would be calculated by the cost of finding the employee’s replacement. Usually, you will only receive damages if real financial loss can be proved. There is not compensation for distress caused by the breach, or for any injured feelings as a result of the employment contract breach.

If I breached my contract, or am planning to, what are my defenses?

In Pennsylvania and New Jersey, if you have been sued for breach of a contract, you must respond by either admitting or denying each allegation in the Complaint. Furthermore, there are several affirmative breach of contract defenses, meaning legally recognized reasons that you can assert that would render the allegations of the Complaint void. This article will address several of those defenses, but keep in mind there are numerous others that could pertain to your situation.

Lack of Capacity

A breach of contract defense of lack of capacity means that one of the parties to the action, the Plaintiff of the Defendant, lacked the fundamental ability to be accountable for their actions and therefore, the contract should be null and void. An example of this breach of contract defense is when a minor child under the age of 18 enters into a contract to purchase an expensive vehicle. The minor child does not have the legally recognized ability to understand the nature of the contract and the contract is therefore voidable.

Fraud

Fraud occurs when one party intentionally and willfully deceives another party as to the nature and consequences of the contract. In order to assert fraud as a breach of contract defense, Pennsylvania courts typically require an affirmative action by the defrauding party, such as a willful misrepresentation of intentional concealment of facts that, if were known, the party being defrauded would not have entered into the contract.

Statute of Limitations

The breach of contract defense of statute of limitations means that the appropriate time for the Plaintiff to bring the lawsuit has already passed. The statute of limitations for a breach of contract claim in Pennsylvania is 4 years for both written and oral contracts. If the contract at the center of the lawsuit was breached more than 4 years before initiating the claim, then the Plaintiff is not entitled to any award or judgment.

Statute of Frauds

Although oral contracts are valid and enforceable in Pennsylvania, certain contracts, such as those for the sale of goods valued at $500.00 or higher, must be in writing in order to be valid. Therefore, if you entered into a contract to buy or sell goods at a price greater than $500.00 and the contract was breached at a later time, the contract may not be enforceable.

These are just some of the affirmative defenses available if you have been accused of breaching a contract. Please consult an attorney prior to breaching any existing contract. Here at Freundlich & Littman, LLC, we are intimately familiar with breach of contract claims and we have years of experience representing both Plaintiffs and Defendants. If you have been accused of breach of contract, do not hesitate to contact us at Freundlich & Littman, LLC.

We can be reached at (215) 607-2004 or visit our website https://philadelphiaattorneylawyer.com/practice-areas/breach-of-contract/ for more information.