Florida Law: Statute of Limitations for Breach of Contract

What is the Statute of Limitations?

The Statute of Limitations is the deadline or time limit for when a suit must be filed. If you do not bring suit within the prescribed time limit, the lawsuit is banned and could be dismissed. In Florida, a lawsuit based on a written contract must be brought within five (5) years. § 95.11(2)(b), Fla. Stat. (2014). A lawsuit based on an unwritten (verbal or oral) contract is four (4) years. § 95.11(3)(k), Fla. Stat. (2014).

What is the Purpose of the Statute of Limitations?

One purpose of the Statute of Limitations is it creates predictability and fairness in regard to filing lawsuits. Potential defendants who may be liable to another party could be put on notice of a lawsuit but will not have it hanging over their heads forever. Also, plaintiffs must decide whether or not to bring a lawsuit in a timely manner.

When Does the Statute of Limitations Period Start?

Generally, the statute of limitations period begins to run from the time the cause of action accrues. § 95.031, Fla. Stat (2014). For causes of action on a contract, the action accrues and the statute of limitations period begins to run at the time of the breach.

However, all contracts are not created equal. Contract law is complex and some contain severe consequences. It is vital that you have an attorney draft and/or review all of your contracts to ensure that your rights are protected. I have helped numerous clients who have lost money because they did not understand the contracts they agreed to or did not know what to do when the other party breached the agreement. In most of these cases, the advice of a contract lawyer could have prevented their monetary loss.

Before you enter an agreement that requires giving or paying valuable consideration, schedule a free thirty minute case assessment with me. It is always wise to consult with an experienced contract lawyer to review the agreement, advise you on your obligations under it, and the consequences of breaching the agreement. You should always make sure you read and understand anything you sign. Seeking the advice of an experienced contract attorney can help you avoid costly mistakes.

If you have any questions, or to make an appointment for a free thirty minute case assessment, contact attorney Abigail D. Edelstein at (407) 862-9449.

Florida Statute of Frauds: Contracts that Must be in Writing to be Legally Valid

Contracts are part of our everyday personal and business lives. Most daily business transactions take place without a formal written contract. For example, a clothing store does not require each customer to sign a written contract each time they purchase something. They usually give customers a receipt or ask them to sign a credit card receipt.

The statute of frauds bars the enforcement of certain types of contracts unless they are in writing and signed by the party (or legally authorized representative of party) against whom enforcement is sought. § 725.01, Fla. Stat. (2014).

The purpose of the statute of frauds is to prevent harm that results from fraudulent conduct. Since oral promises are difficult to prove, requiring a signed writing is a way to reduce fraud and litigation. The requirement that important transactions, such as the sale of real estate or agreements with longer time periods, be in writing has been an effective tool against fraud. By requiring parties to put certain agreements in writing makes the parties review the agreement’s terms and conditions before finalizing the transaction.

Under Florida Law, some common contracts where the statute of frauds applies are as follows:

  • Contracts involving real estate transactions. 725.01, Fla. Stat. (2014).
    • This includes the sale of land, easements, and mortgages.
  • Contracts that cannot be performed within a one (1) year time period. 725.01, Fla. Stat. (2014).
    • The one (1) year time period refers to the time required for performance of the contract. This does not apply to contracts with an infinite duration.
  • Contracts to pay the debts of another. 725.01, Fla. Stat. (2014).
  • Leases with a time period greater than one (1) year. 725.01, Fla. Stat. (2014).
  • Guarantees by health care providers for any guarantee, warranty, or assurance as to the results of certain medical procedures. 725.01, Fla. Stat. (2014).
  • Contracts for the sale of goods valued at $500.00 or more. 672.201, Fla. Stat. (2014).

The lesson from this blog post is that some commonplace transactions, such as leases for a period more than one (1) year or contracts involving real estate, are subject to the statute of frauds and all terms must be in writing. This rule applies to the original agreement and any subsequent amendments or modifications. In order to avoid a statute of frauds issue, you should always work with an experienced Florida business attorney to ensure all agreements comply with the Statute of Frauds and all other requirements of state law. Even if the statute of frauds does not apply to a transaction, it is better to have a written contract just in case any disagreement arises in the future. If you have any questions, feel free to contact Abigail D. Edelstein at (407) 862-9449.

 

Elements of a Valid Contract

A contract is formed when certain requirements are met. The law will consider a contract to be valid if the agreement contains all of the following elements:

1. Offer and Acceptance;

  • Example offer: Joe offers to sell his car to Sally for $5,000.
  • Example acceptance: Sally agrees to buy Joe’s car for $5,000.
  • Can be done orally or in writing. Certain contracts must be in writing. See our Blog post “Florida Statute of Frauds: Contracts that Must be in Writing.”

2. An intention between the parties to create binding relations;

  • offer + acceptance = “meeting of the minds.” Meeting of the minds means the parties intend to be bound by their agreement.

3. Consideration;

  • Each party must promise or provide something of value to the other party. A bargained for exchange.
  • Example: Joe’s consideration is his promise to sell his car to Sally. In exchange, Sally’s consideration is her promise to pay Joe $5,000.

4. Legal capacity of the parties to act; and

  • The parties must understand what they are doing.
  • Example: Insane individuals lack capacity to enter into legally valid contracts because they cannot understand what you are doing. Minors do not generally have the capacity to enter into a contract (with some exceptions).

5. Legality of the agreement.

  • The purpose of the agreement cannot violate the law.
  • Example: A contract hiring someone to rob a bank or kill a person is invalid because it violates the law.

An agreement that lacks one or more of the elements listed above is not a valid contract.

Most contracts only need the above listed elements to be legally valid. In certain transactions, contracts must be in writing to be legally enforceable. See our Blog post “Florida Statute of Frauds: Contracts that Must be in Writing.”

A Florida business attorney will ensure that your contracts comply with Florida law. If you have any questions, feel free to contact Abigail D. Edelstein at (407) 862-9449 or make an appointment for a free thirty minute case assessment.

 

What is a Contract?

Contracts are part of our everyday personal and business lives. If you are a business owner or manager of a business, you deal with contracts when you transact business with contractors, vendors, landlords, banks, employees, and customers. In our personal lives, we deal with contracts when we buy a house, buy a vehicle, sign a lease, and sign up for social media accounts.

Contracts are promises that the law will enforce. A contract is a legally binding agreement between two (2) or more persons or legal entities (e.g. corporations or LLCs), where one party agrees to provide a good or service in exchange for money, services, or other goods.

Contracts are governed by state statutes, common law (judge-made), and private law. Private law consists of the agreed upon terms of the contract between the contracting parties.

It is beneficial to have a written agreement just in case disagreement arises between the parties. Merely reducing an agreement to writing does not automatically make the contract legally enforceable. Some agreements must be in writing and meet specific requirements. See our blog post on Florida’s Statute of Frauds and Elements of a Valid Contract. There are certain clauses that should be included in contracts to protect the parties in the event of a disagreement. For example, jurisdiction, venue, mediation, jury trial, arbitration, and payment of attorney’s fees and costs provisions. A Florida business attorney will help you determine what needs to be in the contract and will ensure that the contract complies with Florida law.

If you have any questions, feel free to contact Abigail D. Edelstein at (407) 862-9449 or make an appointment for a free thirty minute case assessment.

What is a Limited Liability Company (“LLC”)?

A Limited Liability Company, also known as an LLC, is a hybrid organization with characteristics of a corporation and a partnership. LLCs can choose to be taxed as a partnership or a corporation. LLCs are run by a Manager(s) and can be owned by a Member or several Members. Management of a LLC is governed by Florida statute unless members agree otherwise. A carefully drafted operating agreement is one way to control and protect the LLC’s assets among other things.

The following is a summary of why some people choose LLCs:
1. Limit Owner’s Liability. The primary reason for forming a limited liability company is to limit the liability of the owners. If you are sued, your creditors should not be able to get your personal assets.
2. Charging Order Protection. Interests in LLCs are protected from the claims of creditors of their members. For example, if a creditor of a member gets a charging order against the interest of the member, the creditor cannot acquire the debtor’s interest in the LLC. Therefore, the creditor cannot acquire the assets of the LLC. As a result, the creditor must wait until the manager makes a distribution to the member/debtor to get paid. Corporations do not enjoy this protection.
3. Taxes. Most LLCs are not subject to Florida’s corporate income tax. Like partnerships, profits and losses will flow through to the owners. This avoids double taxation.
4. Flexibility. LLCs have the flexibility to draft their operating agreement to cover issues such as members’ contribution obligations, member and management voting powers, profit and loss allocations, governance structure, members’ distribution rights, etc. Amendments and organizational changes related to the LLC can generally be made in the operating agreement alone (without amending the articles of organization).
5. Anonymity. LLCs provide a degree of anonymity. LLCS help keep your name out of databases and asset searches.
6. Formalities Not Required. A corporation requires specific formalities be followed including annual meetings of shareholders and directors each year, meeting minutes which are kept with the corporation’s records, etc. These formalities are not required for LLCs. However, it is a good idea for your LLC to document major decisions even though these formalities are not required.
7. Allocations of Profits and Losses. Unlike S corporations, LLCs can make special allocations of profits and losses among its members. S corporations have one class of ownership with profits and losses allocated according to the percentage of ownership.

As you can see, LLCs are more complex than meets the eye. Having an experienced business lawyer draft or review your agreement will often shed light on things that are often clouded by the excitement of starting a business. Our firm can help your business start off on the right foot.

Call (407) 862-9449 to schedule a free case assessment and discuss your business needs.

How Contracts Can Save Your Business Time and Money

If you own a business, it is important to establish an agreement or contract with those you do business with. It will take a little more effort than a handshake and may cost for an attorney to draft or review the written contract. However, you will have the peace of mind knowing that should the worst happen your business will be protected.

An experienced business attorney will make sure the necessary clauses are included to protect your business. For example, a prevailing party clause explains what costs and fees the losing party is responsible to pay to the winning party. If you did not have a contract, and if there is no law giving you a right to collect fees and costs, then each party will have to bear their own expenses. Costs and fees include attorney’s fees which can add up quickly should the matter be filed in court. It is already bad that the deal fell through. It could be worse if you have to pay an attorney out of pocket with no possibility of recouping those costs.

Most business owners forgo seeking the help of an attorney to draft or review their contracts because they think it is too expensive. What they do not realize is that if the other party does not fulfill their obligations then they will probably have to hire an attorney anyway. Most business owners meet with me after the deal falls through. At this point, I am trying to figure out what the terms of the agreement were and how we can prove such agreement. There is no reason for it to get to this point.

I would advise having an attorney review or draft your contracts before you seal the deal. Paying an attorney to do this could save you a lot of time and money down the road. My firm offers flexible payment options to fit the needs of any business. You can hire us for a specific task or you can make us part of your team. We have monthly plans that include consults (in person or over the telephone), document review, and other services.

To discuss your business needs call (407) 862-9449.