# Legal: what would this be? **URL:** \ **Category:** Factual Questions\ **Created:** [April 20, 2007, 5:24am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898 "2007-04-20T05:24:09Z")\ **Posts on this page:** 18\ **Page:** 1
**Author:** ![TonyF](https://avatars.discourse-cdn.com/v4/letter/t/9de053/32.png) [@TonyF](https://boards.straightdope.com/u/TonyF)\ **Post date:** [April 20, 2007, 5:24am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/1 "2007-04-20T05:24:09Z")
So Mr. A claims to be able to render services to Mr. B. They sign a contract for those services, Mr. B sends a check, and… Mr. A cashes the check and runs. - Is there a proper name for this scenario? Is it just breach of contract, or more? - Could Mr. A be sued for more than Mr. B sent? - Does the amount of money affect any of this? - Any other interesting trivia surrounding this type of scenario? I’m neither Mr. A nor Mr. B–just curious about the scenario. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [April 20, 2007, 6:07am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/2 "2007-04-20T06:07:17Z")
First thing that comes to mind is “fraud” – both a tort and a crime. The amount would determine the criminal penalty; it would also figure into compensation and punitive damages in a civil suit. Contract law would apply also, but I think it’s the least of Mr. A’s worries. (IANAL, but I did pass the contracts class) ---
**Author:** ![Flipshod](https://avatars.discourse-cdn.com/v4/letter/f/f19dbf/32.png) [@Flipshod](https://boards.straightdope.com/u/Flipshod)\ **Post date:** [April 20, 2007, 3:11pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/3 "2007-04-20T15:11:58Z")
fraud and breach of contract-plaintiff’s choice, but the fraud charge would probably get you more damages–you get punitives for willful malice etc. ---
**Author:** ![Bearflag70](https://avatars.discourse-cdn.com/v4/letter/b/8e7dd6/32.png) [@Bearflag70](https://boards.straightdope.com/u/Bearflag70)\ **Post date:** [April 20, 2007, 4:10pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/4 "2007-04-20T16:10:52Z")
- Is there a proper name for this scenario? Is it just breach of contract, or more? Fraud, breach of contract and some equitable theories based upon unjust enrichment - Could Mr. A be sued for more than Mr. B sent? Depends on your state law. Fraud may lead to punitive damages whereas mere breach of contract typically does not. State law may also allow treble damages for check fraud. - Does the amount of money affect any of this? The amount of money may affect the court’s jurisdiction (e.g., small claims, limited civil, or regular trial court). The amount may also affect whether a court will send the case to pre-trial judicial arbitration. The amount may also be of interest to the local DA as a potential check fraud criminal matter. - Any other interesting trivia surrounding this type of scenario? No. None. Absolutely not. ---
**Author:** ![ouryL](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/ouryl/32/6067_2.png) [@ouryL](https://boards.straightdope.com/u/ouryL)\ **Post date:** [April 20, 2007, 7:03pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/5 "2007-04-20T19:03:01Z")
Was there a time constraint? “A” could argue that “B” wants service done within an unreasonable amount of time or that it was an open ended deal? ---
**Author:** ![Captain\_Amazing](https://avatars.discourse-cdn.com/v4/letter/c/6de8d8/32.png) [@Captain\_Amazing](https://boards.straightdope.com/u/Captain_Amazing)\ **Post date:** [April 20, 2007, 7:29pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/6 "2007-04-20T19:29:21Z")
The more general answer would be “bad faith”…Mr. A. has entered into a contract with Mr. B, with no intention of carrying out his requirements under the contract. ---
**Author:** ![Rigamarole](https://avatars.discourse-cdn.com/v4/letter/r/77aa72/32.png) [@Rigamarole](https://boards.straightdope.com/u/Rigamarole)\ **Post date:** [April 20, 2007, 7:42pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/7 "2007-04-20T19:42:04Z")
Depending on what the contract was for, there are probably specific laws which determine what the penalties may be. I’m dealing with a situation like this now, whereby my former landlord has basically stolen my security deposit. The California Civil Code specifically regulates the return of security deposits (within 21 days of vacating the premises, either the deposit or an itemized list of expenditures that the deposit was used for **must** be sent, and in my case the landlord refused to send anything despite repeated calls and letters), and allows a punitive penalty of up to 2X the amount of the deposit in such cases. I am suing for the full amount. 🙂 ---
**Author:** ![Annie-Xmas](https://avatars.discourse-cdn.com/v4/letter/a/ecc23a/32.png) [@Annie-Xmas](https://boards.straightdope.com/u/Annie-Xmas)\ **Post date:** [April 20, 2007, 7:47pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/8 "2007-04-20T19:47:12Z")
If it was an illegal contract (i.e. I’m paying you $5,000 to kill my attorney or procur a kidney for me), then it is not enforcable. ---
**Author:** ![Spiral\_Stairs](https://avatars.discourse-cdn.com/v4/letter/s/50afbb/32.png) [@Spiral\_Stairs](https://boards.straightdope.com/u/Spiral_Stairs)\ **Post date:** [April 20, 2007, 7:53pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/9 "2007-04-20T19:53:39Z")
Fraud is far harder to prove than breach of contract. (In federal court, and in most state courts, fraud must be alleged with a heightened level of particularity. Basically, the plaintiff has to allege and prove the specific details of the fraud.) The hypothetical certainly does not provide enough facts to make out a fraud claim. Among other things, the plaintiff would have to prove intent to defraud. The hypothetical simply says that Mr. A “claimed” he could perform the services, but did not. The plaintiff would have to show that Mr. A never intended to perform the services, and this was a scam from the start. Mr. A might have defenses that would militate against a finding of intent. Intent is not an element of a breach of contract claim, and the usual, lower pleading standards apply to such a claim. Unless the contract specifies recoverable damages, if the plaintiff can show that the defendant’s breach of contract led to other damages (e.g., the plaintiff had to hire Mr. C at a higher price to complete the service that Mr. A didn’t render), those damages are recoverable too. In a breach of contract case, punitive damages are very rarely recoverable. They are sometimes recoverable in a fraud case. (This is not legal advice. I am not your lawyer or a lawyer for anyone who might be reading this.) ---
**Author:** ![TonyF](https://avatars.discourse-cdn.com/v4/letter/t/9de053/32.png) [@TonyF](https://boards.straightdope.com/u/TonyF)\ **Post date:** [April 21, 2007, 12:47am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/10 "2007-04-21T00:47:10Z")
Thanks for all of the replies! [QUOTE=ouryL] Was there a time constraint? “A” could argue that “B” wants service done within an unreasonable amount of time or that it was an open ended deal? [/QUOTE] There is a deadline, but it hasn’t passed yet. There was ample time to execute the service, as evidenced by a number of events. > [@Annie-Xmas](#): > > If it was an illegal contract (i.e. I’m paying you $5,000 to kill my attorney or procur a kidney for me), then it is not enforcable. Damn! 😉 But no, it was perfectly legal. **Spiral Stairs** , thank you for your input as well. I’m a little confused by the following, however: > [@Spiral Stairs](#): > > Unless the contract specifies recoverable damages, if the plaintiff can show that the defendant’s breach of contract led to other damages (e.g., the plaintiff had to hire Mr. C at a higher price to complete the service that Mr. A didn’t render), those damages are recoverable too. In a breach of contract case, **punitive damages** are very rarely recoverable. Are the damages stemming from hiring Mr. C considered punitive damages (and are thus rarely recoverable)? Or are they recoverable? ---
**Author:** ![Spiral\_Stairs](https://avatars.discourse-cdn.com/v4/letter/s/50afbb/32.png) [@Spiral\_Stairs](https://boards.straightdope.com/u/Spiral_Stairs)\ **Post date:** [April 21, 2007, 12:59am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/11 "2007-04-21T00:59:14Z")
[QUOTE=TonyF] … Are the damages stemming from hiring Mr. C considered punitive damages (and are thus rarely recoverable)? Or are they recoverable? [/QUOTE] No, they would not be punitive damages. They would be compensatory damages and would typically be recoverable. ---
**Author:** ![Hello\_Again](https://avatars.discourse-cdn.com/v4/letter/h/85e7bf/32.png) [@Hello\_Again](https://boards.straightdope.com/u/Hello_Again)\ **Post date:** [April 21, 2007, 1:07am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/12 "2007-04-21T01:07:42Z")
Punitive damages are those imposed specifically to convince Mr. B from breaching again. The damages (aka costs) that A incurred hiring C are called consequential damages. Consequential damaes are always recoverable, as long as they can be quantified to some reasonable certainty. Everytime I tell myself I should be studying for Contracts instead of reading the Dope a question like this comes along. 🙂 There’s a famous British case (whose name escapes me, see comment, _supra_ re: studying for contracts) about whether you have to wait for the date of performance before bringing an action for breach. Basically (correct me if I’m wrong, please) if the breaching party has demonstrated unambiguously by their actions that they have breached (the typical example is where A breaches by hiring another contractor) then the Plaintiff need not wait for the official date of performance to pass before suing for breach. In this case, If B is simply not returning phone calls, that wouldn’t be sufficient to imply breach. But if B moves to say, Paraguay, then breach could be implied. ---
**Author:** ![Campion](https://avatars.discourse-cdn.com/v4/letter/c/4491bb/32.png) [@Campion](https://boards.straightdope.com/u/Campion)\ **Post date:** [April 21, 2007, 1:50pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/13 "2007-04-21T13:50:34Z")
[QUOTE=Bearflag70] - Any other interesting trivia surrounding this type of scenario? No. None. Absolutely not. [/QUOTE] 😃 That made me laugh out loud! More trivia, likely irrelevant: some people have suggested that the OP could “choose” whether to pursue a tort theory or a breach of contract theory. In California at least, that isn’t true. (The OP doesn’t give enough facts to determine whether this scenario is a tort or a breach of contract, or even whether any wrongdoing has taken place, so this is truly a trivial point.) California courts do not recognize “contorts” – torts that constitute a breach of contract. (There’s an exception in the insurance context.) So in a situation where there’s a contract, and one party breaches the contract, even if it’s breached in an egregious and offensive manner, the damaged party is limited to contract theories. There may be some independent torts involved (i.e., fraud in the inducement, where one is defrauded into entering into the contract in the first place) but one cannot “elect” a tort theory over a contract theory in a breach of contract situation in California. ---
**Author:** ![Nametag](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nametag/32/406_2.png) [@Nametag](https://boards.straightdope.com/u/Nametag)\ **Post date:** [April 27, 2007, 6:07am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/14 "2007-04-27T06:07:41Z")
**Campion** , if the deal was struck with intent to defraud, was there, in fact, a contract? I had thought, not that a plaintiff could choose, but that intent to defraud would _require_ removal from the contract realm. ---
**Author:** ![TonyF](https://avatars.discourse-cdn.com/v4/letter/t/9de053/32.png) [@TonyF](https://boards.straightdope.com/u/TonyF)\ **Post date:** [April 27, 2007, 7:00am UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/15 "2007-04-27T07:00:09Z")
Ahhh! I subscribed but never got emails about the replies. Thanks again, everyone; it’s been enlightening. Maybe I’ll have more story for you next week. [QUOTE=Hello Again] There’s a famous British case (whose name escapes me, see comment, _supra_ re: studying for contracts) about whether you have to wait for the date of performance before bringing an action for breach. [/quote] Funny, that’s pretty much the next question here. Mr. B has less than a month before he has to fulfill his obligations, but there’s a question of whether that’s possible at this point. He was supposed to buy plane tickets and was given X dollars per ticket, which was more than enough at the time but is probably not going to cover costs now. It’s not clear whether he has purchased them yet, as he is unreachable. (Not that I think that constitutes breach of contract or anything.) > [@](#): > > In this case, If B is simply not returning phone calls, that wouldn’t be sufficient to imply breach. But if B moves to say, Paraguay, then breach could be implied. Not quite to the skipping-town stage yet. I hope it doesn’t get there, but we’ll have to wait and see. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [April 27, 2007, 1:35pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/16 "2007-04-27T13:35:41Z")
> [@](#): > > So Mr. A claims to be able to render services to Mr. B. They sign a contract for those services, Mr. B sends a check, and… Mr. A cashes the check and runs. Ok. There are a few issues here: 1. Did Mr. A intend to perform the contract when he made the agreement? If not, B might have a case for promissory fraud, which entitles him to compensatory damages beyond the benefit of the bargain–even in California, with all due respect to **Campion**. [SM Homepage](http://www.securitymanagement.com/library/helmer_toyota1005.pdf) B might even get punitive damages if he can prove promissory fraud. [http://www.fenwick.com/docstore/publications/Litigation/Litigation\_Alert\_07-05-05.pdf](http://www.fenwick.com/docstore/publications/Litigation/Litigation_Alert_07-05-05.pdf) B could probably also sue for breach of contract, possibly some unfair and deceptive trade practices, and some equitable theories. If so, then it’s a contract case. 1. If it’s a contract case then the damages are more limited, but could easily exceed the amount of B’s check. [http://www.west.net/~smith/damages.htm](http://www.west.net/~smith/damages.htm) Only restitution damages, see previous link, would be limited to the amount of the check. For example, expectation damages are based on the value of the bargained for exchange–not the contract price. If you agree to sell me a painting for $50K and I can prove it’s worth $150K, a breach of the contract will get me $100K in damages if you don’t perform–not just the return of my $50K. 2. Is there a breach? If performance isn’t due yet, but A has indicated explicitly or implicitly that he does not intend to perform, B can demand adequate assurances, and if he doesn’t get them, sue for breach by anticipatory repudiation. > [@](#): > > Under that familiar precept, when a party repudiates contractual duties “prior to the time designated for performance and before” all of the consideration has been fulfilled, the “repudiation entitles the nonrepudiating party to claim damages for total breach” ( Long Is. R.R. Co. v Northville Indus. Corp. , Farnsworth, Contracts § 8.20; Restatement [Second] of Contracts,§ 253; UCC 2–610). A repudiation can be either “a statement by the obligor to the obligee indicating that the obligor will commit a breach that would of itself give the obligee a claim for damages for total breach” or “a voluntary affirmative act which renders the obligor unable or apparently unable to perform without such a breach” (Restatement [Second] of Contracts, § 250; see , I Farnsworth, Contracts § 8.21; Official Comment 1 to UCC 2–610). [http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ny&vol=i98&invol=0154](http://caselaw.lp.findlaw.com/scripts/getcase.pl?court=ny&vol=i98&invol=0154) > [@](#): > > ``` > (1) Where reasonable grounds arise to believe that the obligor will commit a breach by non–performance that would of itself give the obligee a claim for damages for total breach under § 243, the obligee may demand adequate assurance of due performance and may, if reasonable, suspend any performance for which he has not already received the agreed exchange until he receives such assurance. > > "(2) The obligee may treat as a repudiation the obligor's failure to provide within a reasonable time such assurance of due performance as is adequate in the circumstances of the particular case" (Restatement (Second) of Contracts § 251). > > ``` \*Id. \* Obviously, if performance is already due, B sue for breach. ---
**Author:** ![TonyF](https://avatars.discourse-cdn.com/v4/letter/t/9de053/32.png) [@TonyF](https://boards.straightdope.com/u/TonyF)\ **Post date:** [April 27, 2007, 7:11pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/17 "2007-04-27T19:11:45Z")
[QUOTE=Gfactor] Ok. There are a few issues here: 1. Did Mr. A intend to perform the contract when he made the agreement? [/quote] I guess (as others have said) it would be difficult to prove fraud; there’s no evidence that Mr. A didn’t enter into the contract intending to execute it. > [@](#): > > 1. If it’s a contract case then the damages are more limited, but could easily exceed the amount of B’s check. [snip] Interesting! > [@](#): > > 1. Is there a breach? If performance isn’t due yet, but A has indicated explicitly or implicitly that he does not intend to perform, B can demand adequate assurances, and if he doesn’t get them, sue for breach by anticipatory repudiation. If I’m reading this correctly, then the following scenario would still have Mr. A liable for compensatory and other damages: - Mr. B demands adequate assurance. - Mr. A politely says, “Sorry, turns out I can’t do it. Here’s your money back.” E.g., Mr. B then has to hire Mr. C, so Mr. A is then liable for compensatory damages. ---
**Author:** ![Gfactor](https://avatars.discourse-cdn.com/v4/letter/g/9de053/32.png) [@Gfactor](https://boards.straightdope.com/u/Gfactor)\ **Post date:** [April 27, 2007, 10:35pm UTC](https://boards.straightdope.com/t/legal-what-would-this-be/400898/18 "2007-04-27T22:35:21Z")
[QUOTE=TonyF] If I’m reading this correctly, then the following scenario would still have Mr. A liable for compensatory and other damages: - Mr. B demands adequate assurance. - Mr. A politely says, “Sorry, turns out I can’t do it. Here’s your money back.” E.g., Mr. B then has to hire Mr. C, so Mr. A is then liable for compensatory damages. [/QUOTE] The short answer is A doesn’t get to walk away just because he gives the check back. There are several kinds of damages B might still recover, depending on the situation.