Who Can Be a Qui Tam Relator in Healthcare? – A qui tam relator in healthcare is someone who files substantial proof of a direct contact or entity committing fraud such as an employer, partner, corresponding facilities, or similar healthcare entities. There are no specific roles that act as a qui tam relator in healthcare settings. It can be any relevant individual including:
Patients Nurses Doctors Medical technicians
Other parallel healthcare roles may also be in the position to witness medical fraud in any form. Regardless of their role in relation to the accused party, those acting as a relator must have sufficient evidence to file.
What is the qui tam action in NY?
New York False Claim Act Penalties – The New York False Claims Act allows for penalties of $6,000 to $12,000 per violation, attorney fees and costs, and up to three times the loss or fraud in damages. For example, if someone defrauded a New York state or local government of $200,000 through two violations, they could face a total penalty of up to $624,000.
What is the False Claims Act in California?
Taxpayer money is seemingly everywhere. Sadly, where money goes, bad actors often follow, trying to game the system to pursue unjust profits at the expense of law-abiding citizens. Luckily, there are also people committed to doing the right thing. Whistleblower rewards are available as a tool against those who systematically try to make away with tax dollars.
- Over the past two decades, California has recovered over $2 billion under California’s False Claims Act (“CFCA”).
- Enacted in 1987, it is one of the nation’s oldest qui tam statutes.
- The CFCA empowers private citizens (called “relators”) to sue people or businesses who knowingly submit false claims to a governmental entity.
Violators are liable for treble damages and civil penalties. The CFCA rewards successful relators with up to 50% of a recovery. The “relator’s share” typically depends on whether the relator or the State prosecutes the case. Similar to the federal False Claims Act (“FCA”), CFCA differs from its federal counterpart by making it illegal to fail to report an inadvertent benefit after discovering it.
Therefore, if a party inadvertently submits a false claim and fails to report the mistake to the government once discovered, that party can be potentially liable, and lead to similar penalties as knowingly committing the original act. How to be a whistleblower? For blowing the whistle on bad behavior via the federal False Claims Act or the California False Claims Act, whistleblowers may be eligible for an award when they voluntarily provide original, timely, and credible information that leads to a successful enforcement action.
Qualifying whistleblowers can recover anywhere from 10 to 50 percent (under California law) of a successful recovery. Below are details regarding the top awards (under either the FCA, CFCA, or both) in California of all time. $900 MILLION SETTLEMENT
Settlement Date: June 29, 2006 Defendant: Tenet Healthcare Allegation: Billing violations including manipulation of outlier payments to Medicare, as well as kickbacks, upcoding, and bill padding. Total Settlement: $900 million Whistleblower Award: Undisclosed (potentially up to $225 million) Want more info about this case? https://www.justice.gov/archive/opa/pr/2006/June/06_civ_406.html
$325 MILLION SETTLEMENT
Settlement Date: February 24, 1997 Defendant: SmithKline Beecham Clinical Laboratories (d/b/a GlaxoSmith Kline) Allegation: Filing of false claims relating to laboratory tests paid for in whole or in part by the federal government. Total Settlement: $325 million Whistleblower Award: Undisclosed (potentially up to $81.25 million) Want more info about this case? https://www.justice.gov/archive/opa/pr/1997/February97/082ag.htm
$241 MILLION SETTLEMENT
Settlement Date: May 19, 2011 Defendant: Quest Diagnostics Allegation: Overcharging the state’s Medi-Cal program for more than 15 years and giving illegal kickbacks to doctors, hospitals and clinics. Total Settlement: $241 million Whistleblower Award: $70 million Want more info about this case? https://www.cpmlegal.com/news-13 ; https://oag.ca.gov/news/press-releases/attorney-general-kamala-d-harris-announces-241-million-settlement-quest
$187.5 MILLION SETTLEMENT
Settlement Date: November 1998 Defendant: Bank of America Corporation Allegation: Illegally keeping unclaimed bond proceeds from the State of California and more than 1,000 cities, counties and public agencies statewide. Total Settlement: $187 million Whistleblower Award: $22 million Want more info about this case? https://www.nytimes.com/1999/05/17/business/bank-of-america-settles-charges-on-bonds.html
$182 MILLION SETTLEMENT
Settlement Date: November 21, 1996 Defendant: Laboratory Corporation of America Allegation: Charging medically unnecessary lab tests to federal and state healthcare programs. Total Settlement: $182 million Whistleblower Award: Undisclosed Want more info about this case? https://www.upi.com/Archives/1996/11/21/LabCorp-to-pay-182-million/8229848552400/
$102 MILLION SETTLEMENT
Settlement Date: January 11, 2018 Defendant: BP Energy Company (formerly British Petroleum) Allegation: Providing false and misleading information to conceal overpricing while Intentionally overcharging California cities, counties, universities, and government agencies on purchases of natural gas over the course of a decade. Total Settlement: $102 million Whistleblower Award: Undisclosed (potentially up to $51 million) Want more info about this case? https://www.cpmlegal.com/news-102-Million-Settlement-on-Eve-of-Trial-in-Whistleblower-Case-Against-BP ; https://oag.ca.gov/news/press-releases/attorney-general-becerra-bp-energy-company-pays-102-million-settlement
$75.5 MILLION SETTLEMENT
Settlement Date: June 30, 2015 Defendant: VMware Inc. and Carahsoft Technology Corporation Allegation: Misrepresenting their commercial pricing practices and overcharging the government on VMware software products and related services. Total Settlement: $75.5 million Whistleblower Award: Undisclosed Want more info about this case? https://www.cpmlegal.com/news-VMware-and-Carahsoft-to-Pay-75_5-Million-to-Settle-False-Claims-Charge ; https://www.justice.gov/opa/pr/vmware-and-carahsoft-agree-pay-755-million-settle-claims-they-concealed-commercial-pricing
$68.5 MILLION SETTLEMENT
Settlement Date: February 11, 2015 Defendant: Office Depot Allegation: Office Depot employee David Sherwin filed a whistleblower lawsuit under California’s False Claims Act alleging Office Depot fraudulently overcharged California schools. David Sherwin said the company had guaranteed schools lowest prices when buying through a Government Purchasing Alliance but some schools got extra discounts comprising government procurement fraud Total Settlement: $68.5 million Whistleblower Award: $23 million Want more info about this case https://www.bizjournals.com/southflorida/news/2015/01/14/office-depot-to-pay-68-5-million-settlement-to.html; https://www.whistleblowergov.org/recent-whistleblowers.php
$67.5 MILLION SETTLEMENT
Settlement Date: December 15, 2009 Defendant: University of Phoenix Allegation: accepted federal student financial aid while in violation of statutory and regulatory provisions prohibiting post-secondary schools from paying admissions counselors certain forms of incentive-based compensation tied to the number of students recruited. Total Settlement: $67.5 million Whistleblower Award: $19 million Want more info about this case? https://www.justice.gov/opa/pr/university-phoenix-settles-false-claims-act-lawsuit-675-million
$49.5 MILLION SETTLEMENT
Settlement Date: August 30, 2011 Defendant: Laboratory Corporation of America Allegation: Overcharging Medicaid and giving kickbacks in exchange for referrals for its lab tests. Total Settlement: $49.5 million Whistleblower Award: Undisclosed Want more info about this case? https://www.cpmlegal.com/news-13 ; https://www.bizjournals.com/sacramento/news/2011/08/30/california-settles-lawsuit-labcorp.html
$37.5 MILLION SETTLEMENT
Settlement Date: July 19, 2021 Defendant: Prime Healthcare Services (and two doctors) Allegation: A kickback scheme for patient referrals. Total Settlement: $37.5 million Whistleblower Award: $9,929,656 Want more info about this case? https://www.cpmlegal.com/news-Prime-Healthcare-its-founder-and-doctor-pay-to-settle-whistleblower-case-alleging-kickbacks ; https://www.justice.gov/opa/pr/prime-healthcare-services-and-two-doctors-agree-pay-375-million-settle-allegations-kickbacks
$25 MILLION SETTLEMENT
Settlement Date: January 31, 1997 Defendant: Ischemia Research and Education Foundation Allegation: Misusing the University of California’s name, staff and resources to perform multimillion-dollar drug-testing contracts with drug companies. Total Settlement: $25 million Whistleblower Award: $6 million Want more info about this case? https://www.sfgate.com/news/article/UC-to-get-millions-as-suit-is-settled-3138005.php
Need a whistleblower attorney? Cotchett Pitre and McCarthy is one of the nation’s most successful and well-respected whistleblower law firms, representing individuals retaliated against by employers for raising concerns, and individuals reporting corporate fraud resulting in the waste of taxpayer money.
Which federal law provides one of the strongest whistleblower protection provisions in the US?
Whistleblower Protection Whistleblowers play a critical role in keeping our Government honest, efficient, and accountable. Recognizing whistleblowers’ important role, Federal law provides strong protections for them. The protections and remedies for these whistleblowers vary depending on whether the individual is a Federal employee or an employee of a Federal contractor, subcontractor, grantee, or subgrantee.
- Below are answers to frequently asked questions (FAQs) for both Federal employees and employees of Federal contractors, subcontractors, grantees and subgrantees.
- Overview of the WPA – The Whistleblower Protection Act (WPA) (5 U.S.C.
- § 2302(b)(8)) protects Federal employees or applicants for Federal employment from retaliation for making protected disclosures.
The WPA also provides penalties for supervisors who retaliate against Whistleblowers. A disclosure is protected under the WPA if the employee discloses information the employee reasonably believes to be evidence of:
a violation of any law, rule, or regulation,gross mismanagement,a gross waste of funds,an abuse of authority, ora substantial and specific danger to public health or safety.
In general, a Federal employee may make a protected disclosure to anyone, including non-governmental audiences, unless the information is classified or specifically prohibited by law from release. Options for making a protected disclosure include:
Informing a supervisor or someone higher up in management,Submitting a complaint to the OIG by emailing the OIG at,Filing a complaint with the (OSC).
Yes, you may request that the OIG keep your identity confidential. An OIG is prohibited from disclosing an employee’s identity without the employee’s consent unless the OIG determines that disclosure is unavoidable or is compelled by a court order. The WPA makes it unlawful for an employee’s (or applicant for employment) protected disclosure to influence the employer to “take or fail to take, or threaten to take or fail to take, a personnel action with respect to employee or applicant for employment.” A personnel action is broadly defined to include ratings, details, promotions, demotions, termination, access to training, etc.
You may submit a retaliation complaint to (OSC) via their or to the OIG by emailing us at, OSC is the entity tasked by Congress to investigate whistleblower retaliation against Federal employees. OSC has the authority to demand the agency undo any retaliation, compensate the employee who suffered reprisal, and take action against the retaliating supervisor.
OSC also can initiate an action against the agency if it refuses to undo the reprisal. If you submit your complaint to the OIG, we will review it and let you know whether we will investigate it or refer it to OSC or elsewhere. Employees of federal contractors, subcontractors, grantees, and subgrantees (the “employees”) are often in the best position to spot waste, fraud, and abuse related to federal contracts and grants.
Recognizing the critical role these employees play in shedding light on waste, fraud, and abuse in federal contracts and grants, Federal law protects these employees from retaliation for making protected disclosures. See, Employees of federal contractors, subcontractors, grantees, and sub-grantees, as well as personal service contractors for the Federal government.
For a disclosure to constitute a “protected disclosure”, employees of Federal contractors, subcontractors, grantees, and sub-grantees, as well as personal service contractors, must make the disclosure to one of the following entities:
An inspector general;The Government Accountability Office;Members of Congress or representatives of Congressional committees;A Federal employee responsible for contract or grant oversight or management;An authorized official of the Department of Justice or other law enforcement agency;A court or grand jury; orA manager or other employee of the contractor, subcontractor, grantee, or subgrantee who has responsibility for investigating, discovering, or addressing misconduct.
To be protected, the disclosure must include information that the employee reasonably believes is evidence of:
Gross mismanagement of a Federal contract or grant;Waste of Federal funds;Abuse of authority relating to a Federal contract or grant;Substantial and specific danger to public health and safety; orA violation of any law, rule, or regulation related to a Federal contract or grant.
Federal law,, prohibits Federal contractors, subcontractors, grantees and subgrantees, as well as personal services contractors for the Federal government, from discharging, demoting, or otherwise discriminating against their employees for making protected disclosures.
An employee of a Federal contractor, subcontractor, grantee, or subgrantee, or personal services contractor for the Federal government, alleging whistleblower retaliation for making a protected disclosure related to the FTC or FTC contracts may submit a complaint to the OIG by emailing us at, Make sure to describe the disclosure in detail, including when and to whom it was made, and the retaliation experienced, including when it began.
Upon receiving a complaint, the OIG will conduct an initial review to determine whether, if true, the complained of action would constitute whistleblower retaliation. If so, the OIG must investigate the complaint within 180 days, but may request additional time.
The OIG then must forward its finding to the FTC, which has 30 days to determine whether there was retaliation and, if so, order the employer to remedy the retaliation. If the employer does not comply, the agency may seek a court order forcing the employer to do so. If the FTC denies relief or if no action has been taken within 210 days of receipt of the complaint (or 30 days following expiration of any extension agreed to between OIG and the complainant), the complainant may bring an action in an appropriate U.S.
district court against his or her employer as described in, The Whistleblower Protection Enhancement Act of 2012 prohibits agencies from issuing or enforcing nondisclosure agreements, policies, or forms against current or former employees that do not contain the following statement: These provisions are consistent with and do not supersede, conflict with, or otherwise alter the employee obligations, rights, or liabilities created by existing statute or Executive order relating to (1) classified information, (2) communications to Congress, (3) the reporting to an Inspector General of a violation of any law, rule, or regulation, or mismanagement, a gross waste of funds, an abuse of authority, or a substantial and specific danger to public health or safety, or (4) any other whistleblower protection.
The Whistleblower Protection Act, 5 U.S.C. § 2302(b)(8), as amended (governing disclosures of violations of law, waste, fraud, abuse or public health or safety threats); 5 U.S.C. § 7211 (governing disclosures to Congress); 10 U.S.C. § 1034, as amended by the Military Whistleblower Protection Act (governing disclosures to Congress by members of the military); The Intelligence Identities Protection Act of 1982, 50 U.S.C. § 421, et seq., (governing disclosures that could expose confidential government agents); The Subversive Activities Act of 1950, 50 U.S.C. § 783(b); The statutes which protect against disclosures that may compromise the national security, including sections 641, 793, 794, 798, and 952, of title 18, United States Code; and Executive Order No.13526.
: Whistleblower Protection
What is a mandamus action in New York?
New York – In New York, a writ of mandamus may be issued for when an administrative agency, public body or officer failed to perform a duty enjoined upon it by New York Civil Practice Laws & Rules, Section 7803,
What is private right of action NY?
Section 628 – Private right of action 1. Any buyer damaged by a violation of this article may bring an action for recovery of damages. Judgment may be entered in an amount not to exceed three times the actual damages plus reasonable attorney fees.
What makes a claim false?
A false claim is simply a demand for money or property that is based on a material falsehood or a fraud.
What is the qui tam tax in California?
California False Claims Act / Qui Tam Statute – Halunen Law The California False Claims Act (“FCA”) allows whistleblowers to file qui tam lawsuits for violations of state law. The California FCA makes it unlawful to submit false claims to the government for payment or fraudulently avoid an obligation to pay money to the State of California.
- Under the California False Claims Act, a defendant may be liable for up to three times the actual harm sustained by the state due the defendant’s conduct.
- They may also be assessed a fine between $5,500 and $11,000 for each violation of the California False Claims Act they commit.
- When a whistleblower provides information that forms a California FCA case they may be entitled to an award of between 15% – 30% of what is recovered by the California Attorney General or other government entity.
If the government chooses not to participate in the litigation a whistleblower under the California False Claims Act may be entitled to an award between 25% – 50% of the settlement amount. Generally, a whistleblower (also called a plaintiff or relator) must file a complaint within six years of the violations they are reporting.
The California FCA also protects employees blowing the whistle on government fraud from retaliation, although an individual does not have to be an employee in order to pursue a claim under the California False Claims Act. The California False Claims Act allows whistleblowers to for violations of state law.
The California False Claims Act makes it unlawful to submit false claims to the government for payment or fraudulently avoid an obligation to pay money to the State of California. Updated through Stats.2012 Ch.647. Effective date January 1, 2013.
Who is the famous whistleblower?
5. Edward Snowden – In 2013, Edward Snowden, a former computer intelligence consultant, released documents on top-secret National Security Agency programs to reporters at The Guardian and the Washington Post, Snowden tried to raise his ethical concerns about the global surveillance programs internally but was ignored.
- In June of 2013, Snowden blew the whistle publicly on NSA, sparking an ongoing debate about privacy and national security.
- Snowden was charged with violating the Espionage Act, but sought asylum in Russia before he was apprehended.
- On September 2, 2020, a U.S.
- Federal court ruled in United States v.
- Moalin that Snowden did expose illegal U.S.
surveillance behavior. Snowden continues to reside in exile in Moscow.
What are the three types of whistleblowing?
Whistleblowers usually report the following actions: Policy corruption. Fraud. Abuse of power.
Is whistleblowing legal in USA?
An employer cannot retaliate against you for exercising your rights under the Department of Labor’s whistleblower protection laws. Retaliation includes such actions as firing or laying off, demoting, denying overtime or promotion, or reducing pay or hours.
What is the meaning of Writ of habeas corpus?
What You Should Know About Habeas Corpus What is Habeas Corpus?The “Great Writ” of habeas corpus is a fundamental right in the Constitution that protects against unlawful and indefinite imprisonment. Translated from Latin it means “show me the body.” Habeas corpus has historically been an important instrument to safeguard individual freedom against arbitrary executive power.
Why Did Congress Pass the Military Commissions Act?In June 2006, the Supreme Court found in Hamdan v. Rumsfeld that military commissions at Guantanamo created by President Bush were invalid. The court said that the rules violated Common Article 3 of the Geneva Conventions regarding the treatment of detainees being held indefinitely.
After the decision, President Bush asked Congress to pass legislation that would make the military commission trials legal and strip detainees of their due process habeas rights — which they did by passing the Military Commissions Act right before November 2006 elections.
- How Does the Military Commissions Act Take Away Habeas Rights?Section 6 of Military Commissions Act strips any non-citizen, declared an “enemy combatant” by any president, of the right to be heard in court to establish his or her innocence, regardless of how long he or she is held without charge.
- This habeas-stripping provision applies to the detainees held in U.S.
custody at Guantanamo Bay and elsewhere. It violates the Constitution and basic American values. Is it Constitutional to Strip a Person of Their Habeas Rights?No, Section 6 of the Military Commissions Act is unconstitutional and will eventually be struck down by the U.S.
|The establishment of the writ of habeas corpus, the prohibition of ex post facto lawsare perhaps greater securities to liberty and republicanism than any contains.” – Alexander Hamilton, Federalist Paper No.84|
What Can I Do?Two bills have been introduced in Congress that would restore habeas corpus rights — the Restoring the Constitution Act of 2007 (H.R.1415, S.576) and the Habeas Corpus Restoration Act (H.R.1416, S.185). Help us: Urge members of Congress to cosponsor and support this vital legislation and spread the word in your community:
Come to DC in June! The ACLU is hosting a week of action, to demand that Congress defend the Constitution and protect what makes us Americans by restoring due process and habeas corpus. The more people we have in DC, the louder our voice will be! Look for more details at Write a letter to the editor about the elimination of Habeas Corpus and the other problems in the Military Commissions Act. Get the word out through newspapers, newsletters, blogs, personal websites, academic publications and more. Take Action through ACLU Action Alerts. Join the ACLU Action Network to find out important ways that you can take action to help restore the Constitution. You’ll keep up to date on all the latest news and information as well as other exciting opportunities to take action and restore our Constitution such as national conference calls, town halls, and web-chats. Host a House Party and invite all your closest friends. Rent the movie “Road to Guantanamo” or a similar show, start the conversation and encourage your friends to do their part to restore the Constitution. For background on the issues, go to Keep the discussion going! Talk to your friends, neighbors, family and others in your community about the problems in the Military Commissions Act and let them know they can act to restore the Constitution. Forward ACLU Action Alerts to your friends, family, colleagues and neighbors. Communicate with your local community, religious and other leaders to request that they sign up for ACLU Action Alerts and take action.
: What You Should Know About Habeas Corpus
What is a motion to quash New York?
Grounds for Motion to Quash – New York caselaw holds that a Motion to Quash a subpoena can be made to challenge the validity of the subpoena or the jurisdiction of the issuing authority. New York courts broadly interpret this power of the courts to quash or modify a subpoena or impose conditions the court finds just.
What is a Writ of Mandamus in California?
Generally, a Petition for Writ of Administrative Mandamus is a request that a Superior Court review and reverse the final decision or order of an administrative agency. It is brought under California Code of Civil Procedure (CCP) §1094.5. The terms mandamus and mandate are synonymous. CCP §1084.
What is meant by a false and misleading claim?
Information must be accurate and truthful – Any information or claim that a business provides about its products or services must be accurate, truthful and based on reasonable grounds. This includes:
Information on prices images and descriptions of what is offered claims about the value, benefits, qualities or performance of products and services shipping options and delivery times.
This rule applies to any communication by a business, including through:
advertising product packaging a quotation any information provided by staff, whether verbally or in writing social media testimonials websites or any other platform.
Any statement that creates a false impression about goods and services can be breaking the law. In June 2022, Samsung Electronics Australia Pty Ltd was ordered by the Federal Court to pay $14 million in penalties for misleading water resistance claims about its mobile phones.
Samsung admitted to the court that its ads misrepresented the water resistance of its phones. Samsung published 9 ads online and in-store. The ads showed the use of various Samsung Galaxy phones in pools and sea water. One Samsung ad showed a person surfing alongside the statement: “Do everything you love this summer on the Galaxy A5.
Whether its listening to your favourite song by the pool or capturing your Sunday surf session at the beach”. Pool and sea water could, in fact, damage the phones by corroding the charging ports. Read more in the,
What is the penalty for violating the False Claims Act in NY?
Federal False Claims Act (31 U.S.C. §§ 3729 – 3733). Overview – The False Claims Act is one of the laws the Government uses to prevent and detect fraud, waste and abuse in federal health care programs. The False Claims Act establishes liability for any person who “knowingly” submits a false claim either (1) directly to the Government or (2) to a contractor or grantee of the Government, if the money or property is to be spent or used on the Government’s behalf or to advance a Government program or interest.
- A violation of the False Claims Act can result in a civil penalty between $5,500 and $11,000 for each false claim submitted, plus up to three times the amount of the damages sustained by the Government due to the violations(s).
- The False Claims Act defines “knowingly” to mean that a person: • Has actual knowledge of the false claim; • Acts in deliberate ignorance of the truth or falsity of the information; or • Acts in reckless disregard of the truth or falsity of the information.
Specifically, the False Claims Act may be violated by the following acts: • Knowingly presenting, or causing to be presented, a false or fraudulent claim for payment or approval; • Knowingly making or using, or causing to be made or used, a false record or statement material to a false claim; or • Conspiring to commit a violation of the False Claims Act; • Knowingly making, using, or causing to be made or used, a false record or statement material to an obligation to pay money or transmit property to the Government or knowingly concealing or avoiding or decreasing an obligation to pay money or transmit property to the Government.
What is the cause of action for promissory estoppel in New York?
Under New York law, promissory estoppel has three elements: 1) a clear and unambiguous promise; 2) a reasonable and foreseeable reliance by the party to whom the promise is made; and 3) an injury sustained by the party asserting the estoppel as a result of his reliance.
What is a breach of contract cause of action in New York?
Breach of Contract A breach of contract claim is at the heart of business litigation. The elements of a breach of contract claim are (1) the existence of a contract, (2) performance by the party seeking recovery, (3) non-performance by the other party, and (4) damages attributable to the breach.
Each of these elements have been the subject of prolix litigation in both the federal and the state courts of New York. The Existence of a Contract With respect to the first element, for a contract to exist, there must be an offer, acceptance, consideration, mutual assent and intent to be bound. There must be, in other words, an objective meeting of the minds sufficient to give rise to a binding an enforceable contract.
And in particular, an acceptance must comply with the terms of the offer and be clear, unambiguous and unequivocal. If the acceptance is qualified with conditions, it is equivalent to a rejection and counteroffer. And mere silence, when not misleading, can not be construed as acceptance.
Performance by the Plaintiff With respect to the second element, the Federal courts permit the plaintiff to plead in general terms that he has satisfied all conditions precedents to bringing the action, such as performing his end of the bargain. In some instances, the plaintiff may be excused from performing, such as where his performance was conditioned on the defendant’s performance, which did not take place.
In such cases, the plaintiff need only allege facts showing he was excused from performance. For example, it often happens that the plaintiff’s performance is conditioned on the defendant first performing the defendant’s obligations. For example, the buyer of goods doesn’t need to make payment until the seller has delivered goods in accordance with the contract of sale.
- In such cases, a failure by the defendant to perform excuses the plaintiff from performing.
- Where the condition is express, it must be literally performed; substantial performance will not suffice.
- But if the condition is not expressly stated, substantial performance of the condition will suffice to trigger the other side’s obligation to perform.
Thus, suppose, for example, that a buyer issues a purchase order to a seller specifying the exact kind of goods that need to be delivered. If the goods deviate at all from the purchase order, an express condition to payment has not been fulfilled, and the buyer is excused from performing (i.e., making payment).
But suppose a contractor builds a house where not all of the details have been specified in the contract. Because the conditions are not express, substantial performance by the contractor will trigger the homeowner’s obligation to make payment. Breach by the Defendant With respect to the third element, the breach must be what’s called a “material breach”.
A material breach is one that goes to the root of the agreement between the parties. It must be so substantial that it defeats the object of the parties in making the contract. In one case, the producer of a prepaid card entered into a contract with a money transmission service.
The service’s delay in approving advertising for the cards was deemed not a material breach. In another case, an architect’s delay in completing construction plans was not a material breach, where the contract did not specify a deadline and the plans were completed within a reasonable time period. On the other hand, where a contract states that time is of the essence, a failure to meet a specified deadline constitutes a material breach.
By the same token, a printer of a bird guide materially breached its contract with the guide’s publisher where the colors of the birds were incorrect, rendering the guide unsaleable. Resulting Damages With respect to the fourth element, resulting damages, the law seeks to put the injured party in the same position as if the contract had not been breached.
- In that endeavor, the law permits the recovery of both “direct damages” and “consequential damages”.
- Direct damages are those that flow naturally and probably from a breach of contract.
- For example, where the seller delivers imperfect goods, the buyer’s direct damages are the difference between the value of the defective goods and their value if they had been perfect.
Or if the buyer doesn’t make payment, the seller’s direct damages are the money he was owed. Consequential damages include whatever was within the contemplation of the parties when they entered the contract. Thus, consequential damages includes lost profits, damage to the good will of the plaintiff, and special or incidental losses (such as the cost of correcting a defective good, or of transporting the defective goods back to the seller.) But a plaintiff may not recover any damages which are speculative or indefinite.