Ohio Breach of Contract Legal Definition
The law defining breach of contract in Ohio is codified under Ohio Revised Code Section 1302.22. Under this statute, a breach of contract encompasses any failure to perform all or any part of a promise which forms a legally enforceable agreement. This definition allows for a broad spectrum of failures to perform a promise, including, but not limited to: a failure to deliver goods, a failure to deliver goods in a commercially reasonable manner, a failure to deliver goods within a reasonable time frame, or a failure to deliver goods at an agreed upon place . To determine if a failure is unreasonable, Ohio courts will review the actions of the party accused of breaching the contract. Simply put, courts will consider whether the actions were consistent or inconsistent with fair commercial standards of dealings.
Example: Say you enter into a service agreement with a local cleaning company. The company’s services include cleaning your home on a weekly basis. You pay for a full month’s cleaning at the beginning of that month. However, for one week, the cleaning company fails to send a worker to your home. They have breached the contract as they failed to perform all of the services promised under the contract.
Statute of Limitations for Breach of Contract in Ohio
The statute of limitations in Ohio for breach of contract lawsuits is governed by Ohio Revised Code § 2305.06. This statute states that the statute of limitations for claims that arise out of a written contract is eight (8) years. Likewise, the statute of limitations for claims that arise out of an oral contract is six (6) years.
There are certain exceptions to these rules. For example, if the breach of contract is based on fraud or conversion (essentially theft of goods), Ohio Revised Code § 2305.09(D) and 2305.11 provide that the statute of limitations is four years. Additionally, cognovit contracts are rare in Ohio. Cognovit contracts essentially allow the party suing under the contract to secure a judgment on the contract ahead of time. These contracts shorten the statute of limitations to six (6) years per Ohio Revised Code 2305.06(A).
In-house attorneys who are working with outside counsel need to be aware of the statute of limitations for breach of contract suits. This means that even if the lawsuit was properly filed, the Court may dismiss the suit if it is after the statute of limitations expired. That said, Courts do not usually volunteer this information. In-house attorneys who have contracts that are getting close to the statute of limitation should consider whether prompt action is necessary.
Impact of the Statute of Limitations on Legal Actions
When the statute of limitations has run on a breach of contract claim, a party cannot bring an action to obtain the damages that they believe are owed. The limits on recovery set forth in a state’s statute of limitations are firm in most cases-the courts will not step in and use equitable doctrines to alter the result in a case. Courts typically dismiss claims for breach of contract when the statute of limitations has ended before the filing of the lawsuit because the statute of limitations alters the underlying right to sue and thus the cause of action is lost.
Setting forth when a federal or state court can interfere with a party’s right to choose the forum and timing of a case is important. It is within these procedures that the party’s remedies for the breach of the contract exists. If a plaintiff has a claim for breach of the contract, but the statute of limitations set forth in the contesting states has expired, the plaintiff may not pursue a case for damages. The breach of contract must occur before the statute of limitations has run, and the litigation should be brought within the period set forth in the statute of limitations. Ohio, like many states, has a statute that sets forth the time period in which a lawsuit can be brought for breach of a written contract and a breach of an oral contract. These statutes also dictate the manner in which a lawsuit may be instituted and when a suit may be challenged.
The statutes of limitation are 15 years for a breach of a written contract and eight years for a breach of an oral contract. A breach of a written contract may include an oral promise that is made in writing in a contract.
How to Determine Time Limits in Ohio
Determining how long you have to make a claim or defend yourself in a lawsuit is an important aspect of any legal conflict. Ohio has a statute of limitations governing breach of contract claims which provides that you have six years from the date the contract was breached to file suit. It’s important to note that this lapse applies to both parties, so both parties have the same limitations period.
The main exception that extends the statute of limitations until a later date is a clause that allows the statute of limitations to be extended if that clause is in the contract. This is fairly common and doesn’t automatically mean that your six years from the date of breach isn’t valid, but it’s worth investigating to ascertain when you really should be filing suit.
The 6-year statute of limitations runs from the date the breach occurred, not the date you discovered the breach. If the breach was hidden from you, you can still make a claim, but only so long as the original 6-year statute of limitations from the date of the breach has not expired.
Unique Circumstances and the Ohio Statute of Limitations
Despite the generally straightforward nature of Ohio’s statute of limitations, there are situations where its application is either waived or subject to specific exceptions. For example, Ohio courts have ruled that a written acknowledgment of the contract may delay the expiration of the statute of limitations. (Ohio Rev. Code Ann. § 2305.11(A)). As such, in some situations, the statute of limitations may be paused (or not begin to run) while the contract is acknowledged or performance is being attempted. This is especially true when one or both parties take action that either fails to complete performance or completely acknowledge a party’s failure to perform under the contract .
However, it is important to note that most exceptions apply only if the plaintiff knew about the breach of the contract. Therefore, while certain "tolling" events (which pause a statute of limitations from running) may apply, they will never apply if the harmed party is unaware of the breach. (Ohio Rev. Code Ann. § 2305.21). It is also important for parties to keep in mind that Ohio law favors arbitration clauses. Courts often favor the limitation of civil liability through alternative dispute resolution methods, unless the court cannot do so without violating the law of the land.
What to Do if You Think You’ve Been a Victim of a Breach of Contract
When a potential breach of contract comes to light, whether you are the aggrieved party or the party accused of breach, it is essential to consider several steps. The first step is to review the contract to determine what rights and remedies are contained within the contract itself. Are you entitled to notice? What is the period in which a party may remedy a breach before further legal action can commence? Next, consider contacting the other party to inform him or her of the potential breach if you believe the other party is responsible for the breach. Is this a simple oversight that can be easily remedied, or is the breach much more significant?
If the breach is within the terms of the contract, then the aggrieved party may simply want to send a notice. Is the other party out of compliance with the terms of the contract? Is he or she in default under the contract terms? If the alleged breach is minor, this may be all that is necessary to bring the contract back into compliance without further legal action.
If the breach is more significant, parties need to consider what legal remedies they have through the contract itself. Does the contract merely provide for money damages? Can the aggrieved party stop/add specific parties to the contract? Even though pre-litigation is not always the preferred course, many parties find it helpful to contact legal counsel to discuss the matter. Legal counsel can counsel you as to your legal rights and remedies available under the contract. Legal counsel may also recommend utilizing third parties to perform an audit of the matter. If the issues appear significant enough that legal action is advisable, this will give you the opportunity to prepare for that.
Whether you are the aggrieved party or the party accused of a breach of the contract, the next step is to determine what is the cost-effective solution to this potential situation. Does the matter require merely some additional time for the party to remedy the situation? Does the matter involve a major monetary liabilities? Is this a situation that could escalate into a litigation matter? Many times, parties are able to agree to work through the matter outside of court. It is critical that the party analyze the costs and benefits of each of the potential solutions. If a lawsuit is warranted, it is important to file suit as soon as the statute of limitations permits.
Consulting with Ohio Attorneys
The complexity of interpreting statutes, assessing the nuances of your particular case, and guiding you through the various court processes make it essential to consult with attorneys specializing in Ohio contract law. In cases where amounts at issue reach into hundreds of thousands of dollars or more, the value of consultation with legal experts is even greater. An expert contract law attorney can best determine what statutes apply to a particular case and how those statutes can most effectively be argued. Further, a lawyer specializing in this field has the ability to assess your case to make sure that the statute of limitations does not run, and they will fully be able to advise on whether or not an action has been barred with a particular statute of limitations. If this is the case , a lawyer specialized in Ohio contract law will be able to address other issues such as whether fraudulent concealment can be used to mask the breach. Commonly such pleading must be sufficiently pled, and an expert lawyer can help in determining this situation and keep track of all necessary dates to make this happen. While general practice lawyers can handle a wide variety of issues, a lawyer who specializes in contract law has the most experience working on the various issues that come up with complex cases. Whether you are a small business or an individual, you need to determine what sort of resources are available to you when dealing with a breach of contract.