Breach of contract happens when people fail to perform their promised obligations and duty, which will also make them liable for a lawsuit.

Before signing a contract, it is very important to understand and read each provision to make sure that one can do all the terms and conditions stated in the agreement.  By doing this, people can know their legal rights and avoid possible lawsuit.

According to lawyers, US courts recognize a contract if the elements stated below are present:

1.    One party agrees to do certain duties in exchange of a promise.  For instance, a business consultant is hired by a corporation that requires him to serve his employers and not to reveal trade secrets to other companies.  In exchange for this condition, the corporation gives a promise that he will receive a high salary.

2.    The contract is fair.  The agreement between two people should give both of them fair and equal advantages.  Meanwhile, if the agreement will only provide benefits to one side, or when the conditions are unfair to the other party, a contract is considered void.

3.    Both parties have the capacity to make reasonable judgment while signing the contract.  For instance, when one party is intoxicated and enters into a contract, such agreement is void since he or she is not in a position to make reasonable judgment.

4.    No party is forced to sign the contract.  According to lawyers, when one side is forced to sign a contract because of physical threats and moral and emotional pressure, the agreement is void and there is no ground for breach contract.

5.    The contract is signed without undue influence.  For instance, a father forced his 19-year-old daughter to sign a contract who agreed because she feared that her parent will hurt her if she refused.  If this is the situation, the signed contract is not recognized by the court.

6.    Both parties did not commit any misrepresentation or false claim.  If one side gives false statement and lie to encourage the other party to agree with the contract, the agreement is considered void.  For example, an employer said or implied to his secretary that she will receive a certain amount of salary (to encourage her to work for him).  However, the secretary received less than what her employer promised, prompting her to quit on the job.  In this situation, her employer, who lied to her, cannot file a breach of contract.

7.    Both parties are not illiterate.  When someone who is illiterate is forced to sign a contract, the court will consider the agreement void since the person is not in a position to understand and decide for himself/herself.